AbbVie’s Breakup With Shire Torpedoes Fourth-Quarter, 2014 Results

In full-year 2014 earnings as well as fourth-quarter results reported Thursday, AbbVie, the Chicago-area biopharmaceutical spinoff from Abbott Laboratories, showed a year defined by an engagement announcement to Irish drugmaker Shire that quickly crumbled.

AbbVie beat expectations on adjusted figures but took a blow from ending the deal with Shire, including a $1.64 billion breakup fee in the fourth quarter.

Here’s how the company’s year played out and a bit of what’s to come:

Net income: AbbVie’s fourth-quarter earnings came in at a loss of $810 million, compared with a gain of $1.13 billion a year ago, largely due to costs related to calling off the Shire deal. Net earnings for the full year were down to $1.77 billion, down from $4.13 billion in 2013, a 57 percent decline.

Earnings per share: Fourth-quarter EPS was down to a loss of 51 cents, from a gain of 70 cents a year earlier. The company’s 2014 EPS was $1.10, down from $2.56 in 2013.

Excluding some one-time costs, AbbVie’s fourth-quarter EPS was 89 cents for the quarter, beating analyst estimates by 3 cents, and full-year EPS locked in at $3.32, beating estimates by 2 cents.

Revenue: Net sales for the quarter were $5.45 billion, up from $5.11 billion a year earlier, a 6.7 percent increase. Sales for the year rose to $19.96 billion, up 6.2 percent from $18.79 billion in 2013.

The “why”: AbbVie had to account for costs related to ending its deal with Shire. AbbVie’s staple rheumatoid arthritis drug Humira drove revenue with $12.54 billion in sales in 2014.

Quote: “We returned to growth in 2014, a year ahead of schedule, and we expect to continue building on that momentum in 2015 with another year of strong performance,” AbbVie CEO Richard Gonzalez said. “For 2015, we’re focused on commercial and operational execution and the advancement of our promising pipeline as we build the company for long-term sustainable growth.”

Highlights from the year: After announcing a $55 billion deal to purchase Shire in July, AbbVie called off the deal when the Obama administration tightened tax rules to deter U.S. companies from moving their legal headquarters overseas to escape high U.S. tax rates, a move commonly known as “inversion.”

AbbVie also had its hepatitis C drug Viekira Pak approved by the Food and Drug Administration in December, setting off a price war with competitors to establish exclusive deals with pharmacy benefit managers and insurers.

2015 first-quarter outlook: AbbVie reaffirmed its 2015 adjusted EPS of $4.25 to $4.45. Unadjusted, the company expects EPS from $3.91 to $4.11.

What’s next: AbbVie will work on expanding its Humira-reliant pipeline in 2015. The company expects to have $3 billion in hepatitis C drug Viekira Pak sales in 2015, capturing 40 percent of the insured market.

This article appeared in print in the February 2nd, 2015 edition of Hamodia.