While AbbVie handily beat expectations this quarter, the company faces declining Humira sales and a challenged aesthetics business, plus the same macro headwinds blowing against the entire industry.
AbbVie’s first quarter earnings beat analyst consensus, a bright spot in an industry that has otherwise been battered by macro tensions. The company is, as Guggenheim put it, “one of the nicest houses in a challenged neighborhood.”
CEO Robert Michael agreed. “AbbVie is off to an excellent start to the year,” he said on the first quarter earnings call on Friday morning.
Michael dismissed potential tariff impacts off the top of the call, saying that the impact on AbbVie should be “in line with peers.” AbbVie has not considered potential yet-to-be-announced tariffs in its guidance, but Michael believes the company’s manufacturing presence is adequate in the U.S. to shield from any major impacts. The company already has U.S. facilities for API, biologics, toxins and small molecules, and plans further investment of $10 billion into stateside manufacturing over the next decade to support volume growth, particularly as it expands into obesity.
Chief Financial Officer Scott Reents noted that, “while it’s difficult to quantify in the absence of actual policy details,” the company expects “any unfavorability” to only affect some of 2025, as the Trump administration’s trade review will take time.
“We are actively preparing for a number of potential scenarios and would expect to put into place mitigation strategies as we have more information relevant to these dynamics,” Reents said. He also echoed comments from Johnson & Johnson CEO Joaquin Duato, who last week encouraged the Trump administration to consider tax policy changes to promote a shift to U.S. manufacturing.
Still, analysts wanted more details. Responding to questions later in the call, Michael said AbbVie’s robust U.S. manufacturing network allowed it to avoid drug shortages during the COVID-19 pandemic. He noted that Skyrizi is made in the U.S. for the domestic market.
But AbbVie could do a few things, depending on how the tariffs fall, Michael continued. He said the company “could take management actions” or find alternate API sources. AbbVie likely will not look to raise prices of its drugs to absorb the tariff impacts, he added.
“We could also look at cost efficiencies and productivity initiatives as a source of mitigation, which we always do,” the CEO said. “I think what’s more challenging is trying to pass the tariff impacts to our customers, especially with penalties in the government channel and with existing contracts in the commercial setting. So I don’t see that as a viable source for mitigation.”
Michael also addressed drug pricing, responding to reports of President Donald Trump attempting to bring forward an international pricing initiative.
“We hope the administration contemplates the harm that international reference pricing could have on U.S. healthcare, the U.S. healthcare industry and future innovation,” Michael said. “I think anything like price controls, cost increases or higher taxes just leave less investment available across the industry to advance new, innovative medicines.”
But Michael was pleased to see Trump’s executive order addressing the “pill penalty” from the Inflation Reduction Act, which provided longer protection from price negotiation for biologics than small molecule drugs.
Immunology Portfolio Stars
AbbVie reported sales of $13.34 billion for the first quarter, compared to analyst expectations of $12.99 billion. The Illinois pharma took home $12.31 billion for the same period a year earlier. Earnings per share also rose above expectations at $2.46, compared to the estimate of $2.44.
AbbVie raised guidance for the year to a range of $12.09 to $12.29, compared to $11.99 to $12.19 previously.
Behind the successful quarter are immunology heavyweights Skyrizi and Rinvoq, which AbbVie has raised up to replace mega-blockbuster Humira. Skyrizi clocked $3.43 billion worldwide and Rinvoq $1.72 billion for the quarter, increases of 70% and 57%, respectively. Meanwhile, Humira continued its downward trend due to biosimilar competition, with sales of just $1.12 billion, a 50% decline. This compared to $8.99 billion for the full year of 2024 when the biosimilars market was still sorting itself out. The drug peaked in 2022 at $21.24 billion.
Overall, AbbVie’s immunology portfolio rose 16% for the quarter with sales totaling $6.26 billion.
Besides the Humira decline, the company’s aesthetics business was also challenged, with Botox and Juvederm underperforming due to “broader macroeconomic challenges” in the market, Guggenheim said.
Chief Commercial Officer Jeff Stewart said the aesthetics decline was expected, but he’s bullish on the long-term.
Editor’s note (April 25): The headline of this story was updated to reflect the level of criticism aimed at Trump’s drug pricing proposal.
