What risks could derail ABBV's earnings growth?

AbbVie's earnings growth may face several risks that could derail its positive trajectory: 1. **Biosimilar Competition and Humira Decline**: The loss of exclusivity for Humira, coupled with increasing biosimilar competition, poses a significant risk to AbbVie's earnings. The company's net income YoY growth rate was -102.79% as of December 31, 2024. The decline in Humira sales could continue to impact the company's financials if new drugs do not perform well enough to offset this loss. 2. **Regulatory Challenges and Intellectual Property Issues**: The biotech industry is fraught with regulatory hurdles and intellectual property risks. Any delays or setbacks in drug approvals, patent disputes, or regulatory changes could negatively impact AbbVie's ability to generate revenue from its key products. 3. **Market Dynamics and Competition**: The market for pharmaceuticals is highly competitive, and AbbVie faces competition from other biotech companies, generic drug manufacturers, and emerging market players. The ability to maintain market share and pricing power for its products is crucial but may be challenging. 4. **Geopolitical Factors and Supply Chain Disruptions**: Global events, such as pandemics, wars, or geopolitical tensions, can disrupt supply chains and affect the availability of raw materials, which could impact production and sales. Additionally, regulatory environments and reimbursement policies in different countries can vary significantly, posing risks for companies operating globally. 5. **R&D Expenses and Pipeline Success**: AbbVie's R&D expenses are substantial, and the success of these efforts in developing new drugs is critical to maintaining growth. If pipeline projects do not progress as expected or if there are setbacks in clinical trials, this could negatively impact future earnings. 6. **Dividend Sustainability and Share Buybacks**: AbbVie has a history of dividend growth, but the sustainability of these dividends in light of potential earnings declines or changes in cash flow could be questioned. Similarly, the company's share buybacks, though strategic, could be perceived as dilutive if not managed carefully. 7. **Macroeconomic Trends and Healthcare Policy**: Economic downturns can affect healthcare spending and the affordability of medicines. Changes in healthcare policy, such as pricing regulations or reimbursement reforms, could also impact AbbVie's business model and profitability. These risks, among others, could potentially derail AbbVie's earnings growth. The company's ability to navigate these challenges and capitalize on emerging opportunities, such as the demand for obesity drugs and the aesthetics franchise, will be crucial for maintaining its financial performance.