Abbott Labs‘ (NYSE:ABT) highest-selling drug, Humira, continues to add additional indications as the European Medicines Agency (EMA) has approved the drug for the treatment of severe active Crohn’s Disease in pediatric patients who failed to respond to conventional treatments.  EMA recent approval will add an additional revenue stream for the drug as it gears up for competition going forward (Read Pfizer Receives Big Boost As FDA Approves Rheumatoid Arthritis Drug).
Crohn’s Disease affects up to 200,000 children worldwide, and this approval in Europe will certainly strengthen the chances of Humira’s approval for the condition in other regions.  The continuance of such approvals lends support to Abbott’s efforts to expand the drug’s base to new indications to overcome increasing competition and new entrants in the Rheumatoid Arthritis market.
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Humira has been a phenomenal drug for Abbott as it has witnessed double digit growth in the last few quarters. It is the world’s best-selling drug in the autoimmune market, mainly being used to treat Rheumatoid Arthritis. Other indications for which Humira is approved in the U.S. include Psoriatic Arthritis, Ankylosing Spondylitis, Crohn’s Disease, Juvenile Idiopathic Arthritis, and Plaque Psoriasis.
Humira’s revenues exceeded $8 billion in 2011, and we expect it to top $10 billion by 2013. Recently the drug received FDA approval for the treatment of Ulcerative Colitis (UC) and EMA approval for moderately active Crohn’s Disease. All of these events lend support to our expectations of continued growth in sales of Humira in the near term. Thereafter, we expect revenues to gradually decline before patent expiry as newer drugs for Rheumatoid Arthritis penetrate the market. Pfizer is getting ready with its oral drug tofacitinib, while Roche recently reported better efficacy results for monotherapy RA patients. Recently, Belgium-based Ablynx also claimed to show benefits over Humira.
Our price estimate for Abbott Labs stands at $67, implying a premium of about 5% to the current market price.Notes:
- Abbott’s HUMIRA® (Adalimumab) Approved in Europe for Severe Active Pediatric Crohn’s Disease, Abbott News Release, Nov 27 2012 [↩] [↩]