1 Risk You Must Understand With This Spinoff
Nov 21st 2012 12:00PM
Updated Nov 21st 2012 12:04PM
With the impending spinoff of its branded-drug business, Abbott Labs (NYS: ABT) is losing a massive blockbuster drug in Humira. It's a confusing event to understand, with many investors left wondering what to do with these two stocks once they're separated. To help investors better understand the upcoming event, I've just released a brand new premium report outlining both Abbott Labs and its spinoff, AbbVie. Below is a short sample of what you can find in the full report.
All Humira, all the time
Without a doubt, AbbVie's biggest blessing is also its biggest risk. Humira has performed beyond expectations over the last few years, but that success has led to a drug that now makes up over two thirds of Abbott's pharmaceutical sales, which will become AbbVie.
As Humira continues to grow and AbbVie loses patent protection on its lipid-lowering drugs TriCor/Trilipix and Niaspan, the fraction of sales coming from Humira will only get larger.
Being so dependent on Humira exposes AbbVie to threats that could cripple it. First and foremost, knockoffs of the drug will come eventually. Being a biologic, it won't see the same kind of instant decline we see with small molecule drugs that go off patent. But given the enormous sales, there's no doubt that multiple companies will be gunning for Humira.
Like any drug, Humira is also exposed to potential competition from new branded drugs that might offer some advantage over the current offerings. Pfizer (NYS: PFE) , for instance, gained FDA approval for Xeljanz, an oral rheumatoid arthritis drug. The drug is probably not an immediate threat to Humira since doctors are so comfortable with Humira and the rest of the anti-TNF drugs. But as doctors become more comfortable with Xeljanz and as other oral drugs in the same class are approved, they'll undoubtedly cut into some of Humira's sales.
Know your stock
I hope you enjoyed this preview of our brand new report on Abbott and the future AbbVie. In the full version, I outline all of the must-know opportunities and risks facing both companies, so be sure to claim this 2-for-1 report by clicking here now.
The article 1 Risk You Must Understand With This Spinoff originally appeared on Fool.com.Fool contributor Brian Orelli has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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