AbbVie Earnings: Humira Sunshine May Darken

(Bloomberg Gadfly) -- When it comes to AbbVie Inc., all eyes are always on Humira. 

It's the best-selling drug in the world and makes up 63 percent of AbbVie's sales, but competition from biosimilar copies is looming. 

So investors were understandably anxious on Friday when AbbVie reported the drug's third-quarter revenue missed expectations. They got even more reason for concern when Amgen reported trouble with pricing power for its rival drug. AbbVie shares fell 7 percent on Friday.

AbbVie on Friday projected its usual unshakable confidence in its mega-drug's prospects, saying it still expects Humira to deliver $18 billion in sales in 2020, up from $14 billion last year. But an array of forces beyond its control will make that increasingly difficult.

The sales miss might not mean that much; AbbVie blamed it on a shift in customer order timing. But it sure came at a bad time -- right after Amgen Inc., on its Thursday earnings call, warned it likely won't benefit from price hikes next year for its biggest product, Enbrel, a drug in Humira's class. 

The message for AbbVie investors is that Humira, too, might end up losing one of its most valuable attributes: pricing power. It's the biggest indication yet that the price pressures besetting diabetes drugs are extending to previously safer areas such as inflammation, which Humira and Enbrel treat.

Hammering that point home, drug wholesaler McKesson on Thursday evening cut its 2017 earnings forecast, citing aggressive price competition.

AbbVie on Friday noted Humira is in a better position than Enbrel when it comes to prices. While Amgen's drug has recently depended on price increases to grow revenue, most of Humira's growth comes from volume.

Executive commentary on the call suggests AbbVie is coming out of negotiations with payers in better shape than Amgen. But it's hard to imagine the drug won't start to feel some of this pressure.

Potentially volume-sapping competition is mounting, as well. 

It's already arrived in Europe, where cheaper biosimilar versions of competing drugs Enbrel and Remicade are already sold. AbbVie says the impact on its results has been muted so far. But these rivals will likely gain more traction over time and with greater price cuts.

A biosimilar version of Remicade, the first of its type in this drug class in the U.S., is coming in November. Add new drugs such as Cosentyx and Taltz in certain Humira indications and more new drugs on the way, and you have mounting competitive pressure in the larger U.S. market for years to come -- even if AbbVie manages to delay biosimilar competition for Humira itself. (Amgen on Thursday said it was unlikely to launch its recently approved Humira copy next year due to ongoing legal battles.)

Analyst estimates for Humira sales have generally risen this year, as the biosimilar threat has grown more distant. But they may need to come down as these other sources of pressure emerge. 

"Modest erosion" -- a favorite AbbVie phrase when talking about threats to Humira -- adds up when it comes from multiple angles.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story: Max Nisen in New York at mnisen@bloomberg.net.

To contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.net.