AbbVie's Q3 2025 Earnings Call: Contradictions in Aesthetics Strategy, Drug Sales, Tariff Mitigation, and Medicare Redesign Impact

Date of Call: None provided

Financials Results

• Revenue: $15.8B total net revenues, up 8.4% operationally; beat expectations by ~ $300M
• EPS: $1.86 adjusted EPS, $0.10 above guidance midpoint
• Gross Margin: 83.9% of sales (adjusted gross margin)
• Operating Margin: 30.9% of sales (adjusted operating margin), includes a ~17% unfavorable impact from acquired IPR&D expense

Guidance:

• Full-year adjusted EPS raised to $10.61–$10.65 and total net revenues now expected at ~ $60.9B.
• Continue to expect adjusted gross margin ~84% of sales and adjusted R&D expense of ~$9B for 2025.
• Anticipate adjusted SG&A of ~$13.5B and adjusted operating margin ~41% of sales for 2025.
• Q4 outlook: net revenues > $16.3B and adjusted EPS of $3.32–$3.36 (guidance excludes potential future acquired IPR&D expense).

Business Commentary:

• Strong Financial Performance and Revenue Growth:
• AbbVie reported adjusted earnings per share of $1.86 for Q3, which was $0.10 above their guidance midpoint, and total net revenues of nearly $15.8 billion, reflecting an increase of 300 million over their expectations.

• The growth was driven by robust performance across core immunology therapies, neuroscience, and strong operational execution.

• Immunology and Neuroscience Segment Performance:

• Immunology revenues totaled $7.9 billion, up 11.2% operationally, with SKYRIZI achieving $4.7 billion, reflecting a 46% operational growth.

• Neuroscience revenues were more than $2.8 billion, up 19.6% operationally, driven by strong performance in migraine, bipolar, and Parkinson’s disease products.

• Oncology and Aesthetics Segment Dynamics:

• Oncology revenues were nearly $1.7 billion, relatively flat year-over-year, while aesthetics revenues were approximately $1.2 billion, down 4.2% operationally.

• Oncology sales were impacted by competitive dynamics in CLL, while aesthetics faced challenging market conditions in several key markets.

• Pipeline Advancements and Future Growth Aims:

• AbbVie announced positive top-line results for RINVOQ in alopecia areata and vitiligo, and plans to submit regulatory applications for PVEC in rare blood cancer.
• The company anticipates significant pipeline milestones in the coming years, including new product approvals and expanded indications, to drive long-term growth.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described the quarter as "excellent" and said they are "raising our 2025 outlook for the third time this year," highlighted strong platform growth (SKYRIZI/RINVOQ +40% combined) and a robust pipeline (~90 programs), and announced a 5.5% dividend increase—all signalling confidence and constructive momentum.

Q&A:

• Question from Terrence Flynn (Morgan Stanley): Would love your perspective on implications of Cigna’s new PBM model and any comment on IRA price negotiations outcomes for Vraylar and Linzess.
  Response: AbbVie can adapt to PBM model changes due to differentiated global portfolio and execution; IRA prices for Vraylar/Linzess are not public but management says they will not change the company’s long‑term guidance.

• Question from Chris Schott (JPMorgan): Views on IL‑23 market dynamics given Tremfya SC induction rollout and how SKYRIZI positioning versus competitors will evolve; plus any initial sense on 2026 outlook?
  Response: SKYRIZI remains highly competitive amid rapid IL‑23 class expansion; AbbVie’s SKYRIZI+RINVOQ one‑two punch strengthens positioning; momentum supports strong 2026 but formal guidance will be given on the Q4 call.

• Question from Vamil Divan (Guggenheim Securities): Thoughts on updating longer‑term outlook for SKYRIZI/RINVOQ (2027 screen) and comments on recent aesthetic market stress for BOTOX and JUVEDERM in the U.S.?
  Response: Company expects to exceed prior 2027 targets for SKYRIZI/RINVOQ (will provide 2026 guidance on Q4 call); aesthetics face macro weakness (fillers down double digits) but AbbVie holds leading shares (BOTOX ~low‑60s, HA ~mid‑40s) and is investing in marketing, training and new product launches to drive recovery.

• Question from Matt Phipps (William Blair): With Gilgamesh closed, how will future studies be designed for bredacillicin—particularly use of low‑dose active comparator—and how will it fit in MDD treatment paradigm?
  Response: AbbVie will run phase‑2 dose/duration studies (including low‑dose active comparators to preserve blinding as in the POC) then advance to phase‑3; management sees short in‑clinic dosing with rapid, durable antidepressant effects as a viable, clinically adoptable option.

• Question from David Aslam (Piper Sandler): Can you discuss Violev uptake versus competitors (Imapgo) and positioning/market potential for tevapadon (monotherapy and adjunct)?
  Response: Violev is ramping rapidly with ~80–85% in‑play capture versus competitors due to 24‑hour control and lower dyskinesia/sedation; tevapadon (submitted) is a once‑daily D1/D5 partial agonist expected to complement Violev as a differentiated efficacy/safety oral option for monotherapy or adjunct.

• Question from Dave Reisinger (Leerink Partners): How will growth accelerate as Humira dollar declines diminish, and what are the top pipeline readouts to watch in the next ~6–12 months?
  Response: Humira erosion absolute dollars will shrink over time and revenue growth should accelerate driven by SKYRIZI/RINVOQ and neuroscience; near‑term catalysts include TMAB‑A tumor data (CRC/pancreatic/MET), PVEC FDA submission, multiple IBD combo readouts and early amylin/obesity phase‑1/1b data.

• Question from Steve Scala (TD Cowen): Are IRA discounts deeper this year and will they affect 2026; and why was RINVOQ phase‑3 HS completion updated to 2028 from 2026?
  Response: IRA negotiated prices will take effect in 2027 so they do not impact 2026 guidance; the RINVOQ HS timeline remains focused on double‑blind week‑16 data by end of next year—ct.gov timing reflects changes in follow‑up/open‑label durations rather than a data‑quality issue.

• Question from Simon Baker (Rothschild and Redburn): What is the commercial opportunity for RINVOQ in nonsegmental vitiligo and does Elahir’s UK list price parity with the U.S. imply movement to U.S. gross‑to‑net style pricing in Europe?
  Response: Management estimates peak revenue for the next wave of RINVOQ indications (alopecia, vitiligo, HS, lupus) at least ~$2B and sees vitiligo as a meaningful incremental opportunity; Elahir’s UK list price matches the U.S. but net price will depend on NICE/HTA negotiations and broader global pricing dynamics.

• Question from Louisa Hector (Berenberg): Next steps for Capstan in‑vivo CAR‑T and oral peptide platforms, and what market penetration could advanced therapies reach in mature indications (need for combinations to raise efficacy ceilings)?
  Response: Capstan in‑vivo mRNA CAR‑T is advancing FIH dosing (off‑the‑shelf, transient expression, no lymphodepletion) with plans to explore rheumatology; oral peptide work focuses on half‑life extension (oral IL‑23/TL‑1A leads); combinations and new platforms could materially raise efficacy ceilings and expand penetration in mature immunology indications.

• Question from Mohit Bansal (Wells Fargo): How should we view oral IL‑23 competition versus SKYRIZI/RINVOQ, and how important is a portfolio (e.g., Amlin) to compete across segments?
  Response: SKYRIZI’s high, durable efficacy and infrequent dosing provide a meaningful competitive advantage versus orals (which risk short half‑life and adherence issues); a portfolio approach (including Amlin and combination strategies) is important to improve tolerability/durability and expand reach across indications.

• Question from Jeff Meacham (Citibank): Do you expect to formalize agreements with the administration on priorities like onshoring/manufacturing, and what are leading indicators for an aesthetics rebound?
  Response: AbbVie is actively engaging with the administration on access, global pricing and onshoring; for aesthetics, leading rebound indicators are rising consumer confidence, reactivation of middle‑income patients, stabilizing HA filler sentiment and improving clinic demand—management sees early signs of stabilization and is investing in DTC, training and new products.

• Question from Courtney Breen (Bernstein): Current ~75% U.S. exposure — how might geographic mix evolve over five years, and can you quantify RINVOQ label expansion impact?
  Response: Management did not provide a five‑year U.S./ex‑U.S. split, noting mix is driven by product portfolio rather than policy; the RINVOQ IBD label expansion is a clear incremental positive that broadens earlier use for certain patients and contributes material upside to the immunology growth story.

• Question from Assad Haider (Goldman Sachs): Any updated M&A/BD strategy after Capstan/Gilgamesh—are you prioritizing deals for the 2030s and is there appetite for larger transactions?
  Response: BD focus remains on platform and mechanism deals that drive growth into the 2030s (immunology platforms, in‑vivo CAR‑T, oral peptides, neuroscience, oncology, obesity); AbbVie has capacity for larger deals but is prioritizing strategic, long‑term pipeline additions that augment core therapeutic areas.

Contradiction Point 1

Aesthetics Market Recovery Strategy

It involves the company's strategy and timing for the recovery of the aesthetics market, which is crucial for future revenue expectations.

Do you expect a formal agreement with the administration on policy matters? What are the leading indicators of a rebound in the aesthetics industry? - [Jeff Meacham](Citibank)

2025Q3: We're monitoring market conditions, investing to stabilize it, and anticipating new products like Trinavut E to drive recovery. - [Rob Michael](CEO)

Can you discuss how to leverage AbbVie's global commercial presence to market obesity drugs? Are there plans to expand the obesity R&D portfolio? - [Dave Risinger](Leerink Partners)

2025Q2: We see aesthetics as an ongoing demand, especially with GLP-1s. Aesthetic clinics are uniquely positioned to deliver obesity drugs. - [Jeffrey Ryan Stewart](CMO)

Contradiction Point 2

SKYRIZI and RINVOQ Sales Indicators

It involves the company's sales forecasts and expectations for its key products, SKYRIZI and RINVOQ, which are critical for investor expectations.

How do you see the competitive dynamics between SKYRIZI and its nearest IL23 competitor evolving over time? What are your initial thoughts on 2026 considering business dynamics? - [Chris Schott](JPMorgan)

2025Q3: We are confident in SKYRIZI's growth, with share gains in IBD and psoriasis. - [Jeff Stewart](CMO)

Can you explain how Skyrizi and Rinvoq will reach their 2027 revenue targets given their $18 billion and $8 billion annualized figures? Additionally, what is the impact of recent EU tariff announcements on 2026? - [Terence Flynn](Morgan Stanley)

2025Q2: We're pleased with Skyrizi and Rinvoq's performance. We'll update long-term guidance when appropriate. - [Robert A. Michael](CEO)

Contradiction Point 3

Mitigation Strategies for Potential Tariffs

It discusses the company's approach to managing potential tariffs, which could have significant financial implications and impact strategic decision-making.

What are the potential implications of Cigna's new PBM model for AbbVie's business? What were the outcomes of IRA price negotiations for Vraylar and Linzess? - [Terrence Flynn](Morgan Stanley)

2025Q3: Our performance is driven by differentiated medicines and execution, not dependent on PBM models. If changes occur, we will adapt effectively. - [Rob Michael](CEO)

好的，我现在需要处理用户的问题，他们希望我作为专业的金融文章作者，将来自美股上市公司财报电话会议中的冗长问题进行精简和准确化处理。首先，我需要仔细理解用户的具体要求，确保不遗漏任何细节。用户给出的例子是：“Can you elaborate on the mitigation strategies for potential tariffs and the impact on IP? Also, what does the next phase of the amylin program with 295 entail?” 我需要将这个问题简化，同时保持原意，去掉多余的装饰词，并确保符合美式英语的习惯。同时，输出必须仅包含简化后的问题，且以问号结尾。首先，分析原问题的两个部分。第一部分询问关于潜在关税的缓解策略以及对IP的影响。这里的“elaborate on”可以替换为更直接的动词，比如“detail”或者“explain”，但用户可能希望更简洁，所以可能直接用“What mitigation strategies...?”。第二部分是关于amylin项目下一阶段的内容，特别是涉及295的部分。这里“entail”可以替换为“involve”或者“consist of”，但同样需要简洁。接下来，检查是否有冗余词汇。例如，“potential tariffs”可以简化为“tariffs”，因为上下文可能已经清楚是在讨论潜在的关税。“impact on IP”中的“impact”可能可以保留，但需要看是否更简洁。可能改为“What is the impact on IP?”或者直接“IP impact”。然后，考虑美式英语的习惯用法。例如，“Also”可以替换为“and”，但可能需要分开两个问题，因为原问题有两个独立的部分。用户可能希望保持两个独立的问题，所以可能需要分开处理，但原问题中使用的是“Also”，所以可能需要连接词。不过，用户要求的是问题简洁，所以可能分开成两个问题更好，但原问题中是两个部分，所以可能需要合并成两个问题，用“and”连接。另外，注意“amylin program with 295”中的“with 295”可能需要明确，是否是指与295相关的项目，比如产品编号或合作伙伴？但用户可能希望保留数字295，因为这是关键信息。所以应保留“with 295”作为修饰。现在，尝试简化第一部分：“Can you elaborate on the mitigation strategies for potential tariffs and the impact on IP?” 可以简化为“What mitigation strategies are in place for potential tariffs and their impact on IP?” 或者更简洁的“What mitigation strategies address potential tariffs and their IP impact?”第二部分：“Also, what does the next phase of the amylin program with 295 entail?” 可以简化为“What is the next phase of the amylin program with 295?” 或者更准确的“What does the next phase of the amylin program with 295 involve?”综合起来，可能需要将两个问题合并为一个，用“and”连接，但用户可能希望保持两个独立的问题。但原问题中是两个部分，所以可能需要分开处理。但用户提供的例子中的输出是两个问题合并成一个，用“and”连接，所以可能需要保持原结构。最终，简化后的版本可能是：“What mitigation strategies address potential tariffs and their impact on IP? What is the next phase of the amylin program with 295?” 但用户提供的示例输出是合并成一个句子，用“and”连接，所以可能需要保持两个部分在同一个问题中。例如，用户提供的示例输出是：“What mitigation strategies address potential tariffs and their impact on IP? What is the next phase of the amylin program with 295?” 但用户给出的示例输出是两个问题，而用户的问题可能希望保持两个问题，但原问题中的“Also”可能被处理为两个独立的问题。因此，正确的做法是将两个问题分开，每个以问号结尾，但用户可能希望保持原问题的结构，即两个部分合并成一个问题。需要仔细检查用户提供的示例输出是否是正确的格式。查看用户提供的示例输出，原问题被简化为两个独立的问题，每个以问号结尾。因此，正确的处理方式是将两个问题分开，每个作为独立的问题。因此，正确的简化版本应该是：1. What mitigation strategies address potential tariffs and their impact on IP?2. What is the next phase of the amylin program with 295?但用户提供的示例输出是将两个问题合并成一个，用“and”连接，所以可能需要保持原结构。例如：“What mitigation strategies address potential tariffs and their impact on IP? What is the next phase of the amylin program with 295?”但用户可能希望保持两个独立的问题，每个以问号结尾。因此，正确的处理方式是将两个问题分开。因此，最终的简化版本应该是两个问题，每个以问号 - [Terence Flynn](Morgan Stanley)

2025Q1: Our manufacturing in the US, which includes API, biologics, and toxins, allows mitigation actions like inventory management and cost efficiencies. - [Rob Michael](CEO)

Contradiction Point 4

Impact of Medicare Part D Redesign

It pertains to the impact of Medicare Part D redesign on AbbVie's business, which has implications for the company's financial performance and strategic decision-making.

What impact might Cigna's new PBM model have on AbbVie's business? What were the results of IRA price negotiations for Vraylar and Linzess? - [Terrence Flynn](Morgan Stanley)

2025Q3: Our performance is driven by differentiated medicines and execution, not dependent on PBM models. - [Rob Michael](CEO)

Can you clarify the impact on volume from Medicare Part D redesign and the Phase II UC data in 113? - [Terence Flynn](Morgan Stanley)

2024Q4: Part D redesign impacts about 1/3 of the market due to standard eligible out-of-pocket burden reduction. The simplified patient segments and lack of sequential HUMIRA compression are key factors. - [Scott Reents](CFO)