Some drugs are more vulnerable to economic conditions than others. During a recession, "the more critical care-oriented your drug is, the less exposed you are to some extent," says Morningstar analyst Damien Conover. While AbbVie has a "strong mix" of critical care drugs, including cancer treatments, Allergan's aesthetics products "are a little more economically sensitive," he says.
Gonzalez didn't break down AbbVie's so-called payer mix, or the percentage of revenue that comes from various types of insurers, during the recent conference. But private insurance accounts for the largest share of U.S. drug sales at 42 percent, according to a 2017 analysis by the Kaiser Family Foundation.
FEWER NEW PATIENTS
Another coronavirus side effect: The number of new patients starting Humira and AbbVie's new plaque psoriasis drug Skyrizi was down 30 to 40 percent, as doctors restricted patient visits and many dermatology offices were closed, Gonzalez told analysts in May.
Meanwhile, competition is coming for Humira in the U.S. The drugmaker has long been propped up by the $19.2 billion drug, which accounted for 58 percent of sales last year.
AbbVie is counting on Allergan to cushion the blow. But it's integrating the acquisition at a challenging time for the industry and medical aesthetics in particular.
"They're probably not going to get quite as much cash flows from Allergan as they could have had we not gone through this COVID-19 pandemic and related recession," Conover says.
Allergan's aesthetics business took a hit from COVID-19, starting at the end of the first quarter, Gonzalez said at this month's conference, noting that the segment is rebounding "significantly faster than we originally planned" in areas that have reopened.
"When the 2008-2009 financial crisis hit, almost everyone thought this was a business that would suffer disproportionately, and it ended up being more resilient than anybody thought," says Raymond. "Everyone has to get their Botox, no matter what."
On the AbbVie side of the business, the company has high hopes for Skyrizi and new rheumatoid arthritis drug Rinvoq. It also recently announced a cancer research and development partnership to expand its oncology pipeline, and it's backing an effort to develop an antibody therapy that aims to prevent and treat COVID-19.