Pharmaceutical company AbbVie’s (NYSE:ABBV) arthritis drug, Humira, continues to dominate the market despite facing competition from heavily discounted biosimilars. The latest report from Samsung Bioepis, a biopharmaceutical company, showed that even after being available for over a year, biosimilars have only managed to secure a modest 4% market share. This positions Humira as the market leader, holding an impressive 96% share as of February 2024.
One of the key factors contributing to Humira’s dominance could be the support from pharmacy benefit managers (PBMs). Specifically, PBMs have hindered the adoption of biosimilars, primarily due to their apprehension regarding potential profit declines.
Humira’s Sales Decline Despite Lead
While Humira continues to dominate the market, biosimilars are steadily gaining ground. Notably, biosimilars’ market share increased by 2% quarter-over-quarter. This indicates a gradual shift towards biosimilar adoption in the market.
Adding to ABBV’s challenges, a prominent PBM and healthcare company, CVS Health (NYSE:CVS), has shown its preference for biosimilars. In a significant move last year, CVS unveiled Cordavis, its wholly-owned subsidiary, to collaborate with medicine manufacturers to co-produce biosimilar products at significantly lower prices, over 80% cheaper than Humira.
On the other hand, Humira’s global sales reached $3.3 billion in Q4 of 2023, experiencing a 40.8% decrease due to increasing competition. Looking ahead, AbbVie has secured broad formulary access for Humira in the U.S. for 2024. However, the intensifying competition from biosimilars is likely to pose challenges.
Is ABBV a Good Stock to Buy Now?
Over the past year, ABBV stock has shown modest growth of around 5%, trailing behind the S&P 500 Index (SPX), which gained 23.4%. This reflects declining sales of Humira. However, the company is witnessing solid sales for Skyrizi (a drug to treat psoriasis) and Rinvoq (a drug for treating arthritis), which are positives.
ABBV stock has 12 Buy and five Hold recommendations for a Moderate Buy consensus rating. Analysts’ average ABBV stock price target of $181.47 implies 11.83% upside potential.
