Executive Summary / Key Takeaways

• AbbVie's Q1 2025 performance significantly exceeded expectations, driven by robust growth from its ex-Humira portfolio, demonstrating successful diversification beyond its former flagship product.
• The immunology powerhouses Skyrizi and Rinvoq continue to deliver exceptional sales growth, fueled by strong market share gains across multiple indications and compelling clinical differentiation, leading to raised full-year guidance for both assets.
• Strategic acquisitions in Neuroscience (Cerevel) and Oncology (ImmunoGen) are yielding promising pipeline assets and commercial products (Elahere, Teliso-V, Tavapadon, Vyalev), contributing meaningfully to current and future growth.
• Despite near-term macroeconomic headwinds impacting the Aesthetics portfolio, management remains confident in the long-term growth potential of the segment, supported by low penetration rates and pipeline innovation like BoNT/E.
• AbbVie maintains a strong financial position, generating substantial cash flow to support a growing dividend, debt reduction, and continued investment in a deep and diversified pipeline, positioning the company for sustained growth through 2029 and beyond.

The Post-Humira Era: A Strategic Pivot Takes Hold

AbbVie Inc., forged from the pharmaceutical separation from Abbott Laboratories (ABT) in 2013, inherited a legacy anchored by the blockbuster immunology therapy, Humira. For years, Humira represented an unparalleled commercial success, but its impending loss of exclusivity cast a long shadow over the company's future. Recognizing this challenge, AbbVie embarked on a deliberate and aggressive strategy of portfolio diversification and pipeline expansion through both internal R&D and significant external business development. This strategic pivot, initiated well in advance of the U.S. Humira LOE in 2023, is now clearly demonstrating its effectiveness, positioning AbbVie for a new chapter of growth.

The core of this strategy has been the cultivation of a diversified revenue base across key therapeutic areas: Immunology, Neuroscience, Oncology, Aesthetics, and Eye Care. This multi-pronged approach leverages AbbVie's established commercial infrastructure and deep scientific expertise. Early collaborations, such as the long-standing partnership with Janssen for Imbruvica and Genentech for Venclexta, provided foundational strength in Oncology. More recent, transformative acquisitions like Allergan brought significant scale and market leadership in Neuroscience, Aesthetics, and Eye Care, while ImmunoGen bolstered the Oncology pipeline with Antibody-Drug Conjugate (ADC) technology and the commercial asset Elahere. The acquisition of Cerevel Therapeutics further solidified the Neuroscience pipeline, adding promising candidates like Tavapadon and Emraclidine. This history of strategic evolution underscores AbbVie's proactive approach to managing patent cliffs and building sustainable growth drivers.

Central to AbbVie's competitive positioning is its commitment to technological differentiation, particularly within its biologics and targeted therapies. The company's R&D engine focuses on developing innovative medicines designed to elevate the standard of care. In immunology, this is exemplified by Skyrizi and Rinvoq, which target specific pathways (IL-23 and JAK, respectively) with demonstrated superior efficacy and differentiated profiles compared to older biologics and some emerging therapies. For instance, Skyrizi has shown compelling head-to-head superiority data against key competitors like Stelara in Crohn's disease and multiple agents in psoriasis, offering benefits like near-complete skin clearance and convenient quarterly dosing. Rinvoq's profile, highlighted by rapid skin clearance and itch relief in atopic dermatitis and strong performance across rheumatology and IBD, provides a powerful oral option. These technological advancements translate directly into quantifiable competitive advantages, driving significant market share gains against rivals like Johnson & Johnson's (JNJ) Stelara and Pfizer's (PFE) Xeljanz by offering patients and physicians improved clinical outcomes and dosing convenience.

In Oncology, AbbVie is leveraging ADC technology, enhanced by the ImmunoGen acquisition, and developing novel bispecific antibodies. The goal is to create highly targeted therapies that deliver potent payloads directly to cancer cells while minimizing systemic toxicity. This technological approach aims to improve efficacy and tolerability compared to traditional chemotherapy or less targeted agents. The emerging pipeline, including next-generation c-Met ADCs like ABBV-400 and the BCMA-CD3 bispecific ABBV-383, represents a strategic investment in technologies designed to compete effectively in complex cancer markets against established players like Roche (RHHBY) and Merck (MRK) by offering potentially differentiated safety and efficacy profiles.

The Growth Platform Ignites: Q1 2025 Performance

The first quarter of 2025 provided compelling evidence that AbbVie's diversified growth platform is successfully offsetting the anticipated decline in Humira sales. The company reported worldwide net revenues of $13.343 billion, an increase of 8.4% on a reported basis and 9.8% on a constant currency basis compared to Q1 2024. This performance significantly exceeded expectations, driven primarily by the robust momentum of the ex-Humira portfolio, which delivered over 21% growth.

The Immunology portfolio, even with the significant impact of Humira biosimilar competition, saw total revenues increase by 16.6% to $6.264 billion. This growth was powered by the exceptional performance of Skyrizi and Rinvoq. Skyrizi net revenues soared to $3.425 billion, up 72.0% operationally, while Rinvoq net revenues reached $1.718 billion, growing 60.0% operationally. This remarkable uptake reflects continued strong market share gains across their approved indications in psoriasis, psoriatic arthritis, Crohn's disease, and ulcerative colitis. In contrast, Humira global sales declined by 50.6% to $1.121 billion due to biosimilar erosion and molecule compression in the U.S.

The Neuroscience portfolio also delivered a strong performance, with total revenues of $2.329 billion, up 17.3% operationally. Key products like Vraylar ($765 million, up 10.3%), Botox Therapeutic ($866 million, up 17.0%), Ubrelvy ($240 million, up 18.0%), and Qulipta ($193 million, up 48.3%) all contributed to this growth through continued market share uptake and market expansion. The recent launch of Vyalev ($63 million) in advanced Parkinson's disease is also showing promising early trends internationally and is expected to ramp in the U.S.

Oncology revenues grew by 5.8% to $1.633 billion. While Imbruvica sales declined ($738 million, down 11.9%) due to competitive pressures in CLL, Venclexta continued its strong trajectory ($665 million, up 12.3%). The ImmunoGen acquisition added Elahere, which contributed $179 million in Q1 2025, representing over 100% growth compared to the partial quarter contribution in Q1 2024.

The Aesthetics portfolio faced headwinds, with revenues declining 11.8% to $1.102 billion. This was primarily driven by decreased sales of Botox Cosmetic ($556 million, down 12.3%) and the Juvederm Collection ($231 million, down 22.2%) due to challenging macroeconomic conditions impacting consumer demand and unfavorable pricing dynamics in the U.S.

Financially, AbbVie demonstrated solid profitability and cash flow generation. Gross margin improved to 70.0% of net revenues in Q1 2025, up from 67.0% in Q1 2024, benefiting from revenue growth and product mix. Operating earnings increased to $3.733 billion from $2.798 billion in the prior year. Operating cash flow was $1.635 billion for the quarter, impacted by working capital timing and litigation payments, but management highlighted strong expected free cash flow generation for the full year.

The balance sheet shows increased long-term debt ($64.527 billion at March 31, 2025) reflecting recent acquisitions, but the company maintains access to capital and is committed to debt reduction.

Outlook and Strategic Trajectory

Based on the strong start to the year, AbbVie raised its full-year 2025 adjusted EPS guidance to a range of $12.09 to $12.29 and increased its total net revenue forecast to approximately $59.7 billion. This updated guidance reflects increased expectations for key growth drivers, including Skyrizi (now expected at $16.5 billion, up $600 million) and Rinvoq (now expected at $8.2 billion, up $300 million), as well as increases for Botox Therapeutic, oral CGRPs, Imbruvica, and Venclexta. The guidance also incorporates a lower expectation for U.S. Humira sales ($3.5 billion, down $500 million) due to faster erosion and a moderated outlook for Aesthetics ($5.1 billion, down roughly $100 million each for Botox and Juvederm) reflecting current market conditions.

Management remains confident in delivering a high single-digit revenue CAGR through 2029, projecting combined Skyrizi and Rinvoq sales to exceed $31 billion in 2027, a $4 billion increase from previous guidance. This outlook is supported by a deep pipeline with approximately 90 programs in development, including around 50 in mid- and late-stage trials. Key anticipated milestones in 2025 include accelerated FDA approval for Teliso-V in lung cancer, regulatory submissions for Tavapadon in Parkinson's and PIVEC in BPDCN, and the regulatory application for the novel aesthetic toxin BoNT/E, with commercialization expected in 2026.

Strategic business development continues to add depth and future growth potential. The recent acquisition of Nimble Therapeutics brings an oral peptide IL23R inhibitor and a peptide platform to enhance immunology discovery. The licensing agreement with Gubra marks AbbVie's entry into the promising obesity field with a long-acting amylin analog (ABBV-295), which has shown positive early Phase 1 results and offers potential differentiation in tolerability and dosing frequency. These investments, coupled with planned U.S. capital investments exceeding $10 billion over the next decade to expand manufacturing capacity, underscore AbbVie's commitment to long-term growth beyond the current decade.

Competitive Landscape and Risks

AbbVie operates in highly competitive therapeutic areas against major global pharmaceutical companies like Pfizer, Johnson & Johnson, Roche, and Merck, as well as numerous smaller biotech firms. Competition manifests across various dimensions: product efficacy and safety, pricing and market access, sales and marketing capabilities, and the ability to innovate and bring new therapies to market.

In Immunology, Skyrizi and Rinvoq compete directly with established biologics and emerging oral therapies. AbbVie's strategy of generating extensive head-to-head data and focusing on differentiated profiles has been critical to gaining market share. While competitors like J&J (Stelara) and Pfizer (Xeljanz) have significant market presence, AbbVie's newer assets are demonstrating superior clinical performance in key patient populations, driving their rapid uptake.

In Oncology, AbbVie competes with broad portfolios from Roche, Merck, and others. While Imbruvica faces competitive pressures, Venclexta holds a strong position in certain hematologic malignancies. The emerging ADC and bispecific pipeline aims to carve out new market segments and compete based on novel mechanisms and targeted delivery.

The Aesthetics market, while facing macroeconomic challenges, is characterized by intense competition in facial injectables. AbbVie's market leadership with Botox Cosmetic and the Juvederm Collection is challenged by existing and new entrants. The success of pipeline assets like BoNT/E will be crucial for maintaining market share and driving category growth.

Key risks to AbbVie's outlook include the continued pace of U.S. Humira erosion, which has been faster than initially anticipated and could further impact revenue if molecule compression accelerates. The Aesthetics business remains sensitive to economic conditions and consumer spending. Litigation risks, including ongoing antitrust and product liability cases, could result in significant financial liabilities. Regulatory risks, such as potential delays or unfavorable outcomes for pipeline assets (as seen with the 951 CRL), could impact future growth drivers. Furthermore, global macroeconomic factors, including potential pharmaceutical sector tariffs, pose a risk. Management acknowledges the uncertainty around tariffs, noting that current guidance does not include their impact, but highlights AbbVie's extensive U.S. manufacturing presence and ongoing investments as potential mitigation factors. Policy changes related to drug pricing also remain a significant long-term risk for the industry.

Conclusion

AbbVie's first quarter 2025 results underscore the successful execution of its strategic pivot away from reliance on Humira. The robust performance of the ex-Humira growth platform, particularly the exceptional momentum of Skyrizi and Rinvoq, is driving strong top-line growth and offsetting the impact of biosimilar competition. Strategic acquisitions have diversified the portfolio and added promising pipeline assets in Neuroscience and Oncology, while new ventures like the entry into the obesity market signal a commitment to identifying future growth drivers. Despite facing near-term headwinds in Aesthetics and the ongoing challenge of Humira erosion, AbbVie's diversified business model, strong financial position, and deep pipeline supported by technological innovation provide a clear runway for sustained growth through the end of the decade. The company's ability to continue leveraging its differentiated technologies, execute on key pipeline milestones, and navigate potential policy and macroeconomic risks will be critical factors for investors to monitor as AbbVie solidifies its position as a diversified biopharmaceutical leader.