AbbVie (ABBV)

Skyrizi and Rinvoq Replace Humira

AbbVie is handing its immunology business from one drug to two. Humira, its arthritis and immune-disease drug, has faced biosimilars (cheaper copies of a biologic drug) in the US since January 2023. Two newer immune-disease drugs are replacing it. FY2025 net revenue was $61,160M: Skyrizi $17,562M (28.7%), Rinvoq $8,304M (13.6%) and Humira $4,540M (7.4%), still falling.

Humira's US revenue fell 35% in 2023, its first year against biosimilars, from $18,619M to $12,160M, and by 2024 it was down 62% at $7,142M (filed segment data). AbbVie worked to keep Humira on insurers' lists of covered drugs, which drugmakers do by paying rebates: discounts returned to insurers and pharmacy-benefit managers. Part of the fall was therefore lower net price, so units fell by less than revenue. A chemically made drug loses 77-82% of its units within 12 months of generic entry (Grabowski et al.), a far steeper first year. The guide to loss of exclusivity (LOE) uses Humira as its biosimilar case.

Two products face a near-term hit: Humira, and the blood-cancer drug Imbruvica, whose Medicare price is set under the Inflation Reduction Act (IRA) from 2026. Together they were ~12% of FY2025 revenue. Skyrizi and Rinvoq patents run to 2033 and beyond. Skyrizi's share is large enough that one event on that drug, such as a safety warning or a price cut, would move the whole company. It is still below 40%, the level at which a company's value rests mainly on one product (see the concentration map).

R&D, Margin and Payout

R&D was $9,096M, 14.9% of sales, the lowest of the six large drugmakers we profile and below the 20.9% average in the survey by PhRMA, the US drug industry body. AbbVie also booked $5,016M on a separate line for acquired in-process R&D (IPR&D) and milestones. IPR&D is the upfront price paid to license or buy drug candidates; milestones are later payments due as those candidates pass set stages. Counting both gives 23.1%, close to Merck's 24.3%, which carries such charges inside R&D (see the R&D intensity guide). GAAP operating margin was 24.6% ($15,075M of operating earnings).

The dividend was $6.65 per share. Dividends paid were $11,657M against GAAP net earnings of $4,226M, a ~276% GAAP payout and the extreme version of the GAAP payout trap. Two non-cash charges explain most of it: $7,377M of amortisation on acquired intangibles and a $6,495M charge for the change in fair value of contingent consideration, the payments AbbVie may still owe the sellers of businesses it bought. Operating cash flow was $19,030M, so dividends took about 61% of it.

Valuation Framework

AbbVie is valued as a sum of parts. Humira and Imbruvica, the ~12% near-term group, get explicit declines. Skyrizi and Rinvoq get a DCF running to their exclusivity in 2033 and beyond. The pipeline adds risk-adjusted NPV (rNPV), which weights each drug in development by its odds of approval. A sector multiple on GAAP earnings would carry the amortisation distortion straight into the answer.

What to Watch in the Financials

Skyrizi and Rinvoq against Humira. Revenue grows only while the two newer drugs add more each year than Humira loses. Humira is down to 7.4% of revenue, so less of it is left to lose.

GAAP payout (~276%). The ratio stays high while amortisation and contingent consideration charges run through net income, so judge dividend cover on cash flow.

Skyrizi's share. Watch whether Rinvoq (13.6%) narrows the gap, or Skyrizi becomes a one-drug dependency like Keytruda, Merck's cancer drug at 48.7% of its sales.

Key Risks

Immunology competition. Skyrizi and Rinvoq compete in crowded drug classes. Share gains can reverse without any patent event.

Imbruvica erosion. Its IRA price adds to the Humira drag well before the growth drugs' 2033 protections expire.