Shift of focus to oncology
However, the company is currently going through a transition, though not a self-proclaimed one. The oncology segment, despite being smaller in size, has been doing significantly well over the last few quarters. As of the last-reported quarter, the oncology segment accounted for only 15% of the total revenue, but it recorded a 43% year-over-year growth.
The oncology segment is driven by two drugs – Imbruvica and a newer addition Venclexta, both used in the treatment of lymphocytic leukemia, a kind cancer that affects the bone marrow and blood. Imbruvica sales jumped almost 40% in 2018 to 3.6 billion and the company estimates the drug has the potential to reach peak annual sales of $7 billion.
Meanwhile, Venclexta
has also been showing steady quarter-over-quarter progress and has the
potential to become a blockbuster drug.
Despite the steady growth, these two drugs might take some time to offset the weakness showed by Humira. But when taking into account a strong pipeline with as many as 16 late-stage candidates, it makes Abbvie quite an attractive prospect.
Most promising in its pipeline is upadacitinib, a rheumatoid arthritis drug that could drive the immunology segment even if Humira fails in the future. This drug has the potential to bring in annual revenues of $6.5 billion.
The oncology market
Recent studies indicate that cancer drug sales could reach $200 billion in the next 10 years. Worldwide oncology drug sales are expected to increase at a compound annual growth rate of 12%, which presents great growth opportunities to biotech firms.
READ: What is NASH and which biotech companies are vying for its first-mover status
Abbvie has a forward PE ratio of 8.33, which is much better than most of its rivals. Hence, it may be said the dip has presented a buying opportunity for a stock that is looking bright in the oncology side. Add to that the fact that the North Chicago, Illinois-based biopharmaceutical company offers one of the best dividend stocks with a yield of 5.46%.
Maybe its time to rejig your portfolio.
DISCLAIMER: The article does not necessarily imply the views of AlphaStreet, and contains opinions of the author alone.
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