For investors looking for a big pharma stock, AbbVie and Pfizer are both top choices.
For investors looking for a big pharma stock, AbbVie and Pfizer are both top choices. Over the last five years, AbbVie is up approximately 130 percent. That’s a clear winner over Pfizer, whose price has only gone up 25 percent in the same period. But that’s not the only consideration. Let’s take a look at the two companies.
AbbVie
AbbVie’s 2018 guidance revision in late January was unexpectedly strong, mostly built on the new corporate tax rate. It has the world’s best-selling drug, Humira, for arthritis, plaque psoriasis, ankylosing spondylitis, Crohn’s disease, and ulcerative colitis. And thanks to GOP tax breaks, its 2018 tax rate will be 9 percent, a shockingly lower rate than the expected 20 percent. Over the next five years it expects the tax rate to be about 13 percent.
Humira sales continue to grow and its Mavyret for hepatitis C has exceeded expectations. By 2020, AbbVie expects Humira sales to hit $21 billion.
Humira isn’t the only arrow in its quiver. It hopes to get approval for elagolix for endometriosis-associated pain in this year’s third quarter. It has submitted an application for risankizumab for plaque psoriasis, and it has another autoimmune disease drug upadacitinib that might be approved next year. In April, AbbVie reported that upadacitinib, a JAK1-selective inhibitor, had positive top-line results in moderate to severe rheumatoid arthritis.
JAK inhibitors are believed to be an increasingly larger part of the autoimmune market. Ronny Gal, an analyst with Bernstein’s, recently wrote in a note to clients that JAK inhibitors are likely to take up 24 percent of the market, which will be tough news for Amgen, whose Enbrel drop in sales “will accelerate as physicians increasingly use JAKi as the second drug after (AbbVie’s) Humira, instead of trying a second aTNF (Enbrel).”
Which is another way of saying, that although Humira will dominate, there’s competition coming—and AbbVie appears prepared for it.
Pfizer
Pfizer is admittedly less flashy than AbbVie, but more stable and reliable as a result. Humira makes up almost 60 percent of AbbVie’s total revenue, but Pfizer had eight blockbuster drugs in 2017, spreading the wealth throughout their portfolio. Keith Speights, writing for The Motley Fool, notes, “Instead of facing the prospects of generic competition for its top drugs, Pfizer is moving past its patent cliff. Although the company’s revenue growth continues to be weighed down somewhat by declining sales for several products that have lost patent exclusivity, the negative impact is becoming a lesser problem each year.”
The company’s top three drugs are Ibrance for cancer, Eliquis, an anticoagulant, and Xeljanz, for autoimmune diseases. Speights also thinks its Eucrisa for atopic dermatitis, Seglatro, Steglujan and Segluromet, all for type 2 diabetes, have the potential to bring in strong sales.
Its pipeline is deep, with 28 late-stage programs. Two that look particularly strong are dacomitinib and lorlatinib for lung cancer. Mikael Dolsten, the company’s head of research and development indicated earlier this year that the company expects approval for up to 15 blockbuster drugs or new indications for existing drugs over the next five years.
The company also has a strong vaccine program. Its Prevnar 13 for pneumococcal racked up $1.53 billion in fourth-quarter 2017 sales alone. Sales fell 7 percent in the U.S., international sales rose 27 percent. It shows signs of slowing, but Pfizer has other vaccines, including an early-stage vaccine against RSV, a childhood respiratory virus that kills about 120,000 children worldwide annually, and another 177,000 older adults are hospitalized yearly because of it. It is also developing late-stage vaccines against C. diff and S. aureus infections, which Tim Anderson, an analyst with Bernstein, recently described in a note as “represent(ing) new, unprecedented opportunities” if approved. It also is working on a next-generation vaccine for pneumococcal infection.
AbbVie is probably a better investment short-term and Pfizer, which is less volatile, is probably a better investment long-term. Both, however, are likely good investments.
