AbbVie Prepares for Imbruvica: AbbVie, a pharmaceutical company, is bracing itself for upcoming government price negotiations that could affect its lucrative cancer drug, Imbruvica. In preparation for the anticipated revenue decline resulting from these negotiations, AbbVie has disclosed a $2.1 billion charge. Imbruvica, a leukemia treatment, was among the first 10 drugs selected for price negotiations with U.S. Medicare insurance plans.
The government’s goal is to save $25 billion annually on drug costs by 2031. While the specific new prices for these drugs are yet to be determined and won’t take effect until 2026, AbbVie has used a provisional price, leading to a significant decrease in estimated future cash flows from Imbruvica.
These selected drugs are among the costliest to Medicare for Americans aged 65 and older. Despite concerns over potential revenue reductions, Imbruvica had an impressive third-quarter sales figure of $908 million, surpassing Wall Street expectations. Analysts had already factored in the impact of Medicare price negotiations on Imbruvica, so the impairment update did not significantly alter their views.
AbbVie has increased its annual profit forecast, citing better-than-expected sales of its top-selling arthritis drug, Humira, which faced new competition. Despite this positive news, AbbVie’s shares experienced a more than 5% drop in afternoon trading. Some analysts believe this decline is unwarranted, given the overall strong performance of AbbVie’s business.
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Humira’s global sales in the third quarter decreased by 36% to $3.55 billion, but this figure still exceeded analysts’ estimates. This drop in sales is due to the introduction of over half a dozen biosimilars, or near copies, of Humira in the market this year.
These biosimilars come from various companies, including Sandoz, Amgen, and Boehringer Ingelheim. Despite the competition, Humira has managed to maintain favorable positions on insurance drug coverage lists. AbbVie has adjusted its 2023 outlook for Humira’s sales erosion to 35%, down from the previous estimate of 37% erosion.
AbbVie’s newer immunology drugs, Skyrizi and Rinvoq, have performed well, with sales figures exceeding analyst expectations. Skyrizi generated sales of $2.13 billion, while Rinvoq reached $1.11 billion in sales.
The company now expects an adjusted profit of $11.19 to $11.23 per share for 2023, up from the earlier forecast range of $10.86 to $11.06 per share. In the third quarter, AbbVie reported revenue of $13.93 billion, surpassing estimates of $13.71 billion. The adjusted profit of $2.95 per share also exceeded analysts’ expectations by 9 cents. Despite the initial market reaction, many believe AbbVie’s business is thriving, and the impact of Medicare price negotiations is already priced into their outlook.
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What is the revenue of Imbruvica?
Imbruvica’s net revenues took a dip of 20.0 percent globally, with U.S. net revenues at $678 million and international profit sharing at $230 million. On the other hand, Venclexta’s net revenues saw a rise of 14.6 percent globally, or 14.0 percent on an operational basis, with a total of $590 million.