Abbott spin-off AbbVie: Acquirer or target?

A pharmaceutical takeover rumor is in the air.

By Stock Traders Daily Jan 24, 2013 3:39PM

Droplet Falling from Pipette into Test Tube copyright Andrew Douglas, Radius Images, Getty ImagesBy Barry S. Cohen 

 

Newly minted pharmaceutical company AbbVie (ABBV) is still in diapers, but there is some question as to whether the Abbott Laboratories (ABT) spin-off will even advance to taking baby steps before it's adopted by another family.

 

Rumors persist that potential suitors for AbbVie include Bristol Myers-Squibb (BMY) and Roche (RHHBY). Bristol needs a boost to its pipeline and may be looking longingly at what AbbVie has in the works: 10 drugs in pivotal-stage testing and more than 10 in mid-stage trials. 


Roche seems to be a less likely acquirer since its focus seems to be more on gene sequencing than a big pharmaceutical merger.  


Among the drugs being tested by AbbVie is a potentially promising next-generation hepatitis C drug; the intestinal gel Duopa for the treatment of advanced Parkinson's disease; daclizumab for multiple sclerosis; and new indications for Humira, which already has nine indications and another four in late-stage development, such as pediatric Crohn's disease.


If it survives as an independent company, AbbVie will certainly need many of those drugs being tested to be winners. That's because the company today is pretty much a one-trick pony, with its anti-inflammatory Humira accounting for about half of AbbVie's $18 billion in annual sales and about 70% of the company's profits.

 

The big challenge will be in 2016, when Humira's patent expires. The drug is also facing some formidable competition, including Pfizer's (PFE) Xeljanz for rheumatoid arthritis, which got FDA approval in November 2012. More competition is on the horizon, too, when baricitinib -- from Eli Lilly (LLY) and Incyte (INCY) -- enter the market. AbbVie lost patent protection for a couple of key cholesterol drugs last year -- TriCor and Trilipix -- and Niaspan falls off patent this year, putting another $835 million in sales at risk.

 

Some have speculated that AbbVie may be an acquirer rather than a target. But the company says it has no plans to use its $7 billion in cash to make a large acquisition, confident that its pipeline will meet future revenue growth.

 

The company may be interested in some smaller acquisitions and licensing arrangements, though. With a large sales force and an established research base, AbbVie should be an attractive partner for smaller companies seeking to develop and commercialize their products. 


More from Stock Traders Daily 

 

 

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
275
275 rated 2
482
482 rated 3
656
656 rated 4
643
643 rated 5
650
650 rated 6
638
638 rated 7
485
485 rated 8
281
281 rated 9
127
127 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
HPQHEWLETT PACKARD CO10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.