AbbVie: Increasing Moat to Wide and Boosting Valuation Based on Improved Portfolio Outlook

We are increasing AbbVie’s moat rating to wide from narrow largely based on the successful navigation through the Humira patent losses. Following U.S. biosimilar Humira launches in 2023, AbbVie has developed a strong, diversified portfolio that is heavily protected with long-dated patents. In particular, immunology drugs Skyrizi and Rinvoq are well positioned for growth based on leading efficacy in several large immunology indications, and both carry patent protection into the early/mid-2030s. Further, the well-positioned aesthetics business (led by Botox) provides long product cycles due to brand power and physician entrenchment. With Humira representing close to half the company’s profits before international biosimilars launched in 2019, the ability to work through the biosimilar competition and emerge with a strong portfolio shows solid strategic execution. The firm’s successful ability to redeploy capital to set up a stronger, more diversified intangible asset base supports a wide moat.