We are increasing our

AbbVie ABBV fair value estimate to $102, following the Humira licensing agreement between AbbVie and Pfizer, allowing Pfizer access to the U.S. market for its biosimilar version of Humira in November 2023. Before this announcement, we had expected Pfizer to launch its biosimilar Humira at-risk at some time close to 2020. However, following this announcement, an at-risk launch looks more unlikely by Pfizer. The strong patent protection AbbVie has developed around Humira has proven more difficult to penetrate than we had initially expected. Typically, noncomposition-of-matter patents don't hold off generic competition. However, in this case, the complexity of Humira's biologic structure and the large amount of additional noncomposition-of-matter patents makes the case against at-risk launch stronger. The additional years of exclusivity drive our fair value estimate to $102 from $97 and provide AbbVie a few more years of strong cash flows, which we expect will be used to help fund research and development of next-generation drugs, supporting the firm's narrow moat. However, we do expect a significant decline in Humira sales following the buildup of biosimilar competition in the U.S. starting in 2023 with a 30% decline projected, followed by a 50% decline in 2024 as several biosimilar versions of Humira will likely drive down the price of the drug.