AbbVie may be working through COVID-19, but it’s pressing ahead with its Allergan merger, too—and taking stock of products hit by pandemic lockdowns. That puts Allergan’s aesthetics business top of mind, but AbbVie CEO Rick Gonzalez figures customers are ready and able to return quickly for treatment.
With social distancing the rule of the day, many offices that administer Allergan’s aesthetic products are closed and not performing procedures, Gonzalez said on a Friday conference call. But AbbVie—which expects to close the $63 billion merger this month—is confident the disruption “while likely substantial, will be transient,” Gonzalez told analysts.
To reach that conclusion, AbbVie and Allergan considered the recession of 2008 and 2009, and early data so far from the COVID-19 recovery in China, plus a range of other factors. The companies took a “considerable amount of time” and also looked at supply and demand dynamics, plus potential competition, the CEO said.
Allergan’s data show most of its aesthetics customers aren’t expecting to be financially affected by the pandemic. Fifty percent of them have household incomes of more than $150,000 per year, Gonzalez said, and 60% of them work for corporations, not the small businesses mostly like to be shut during lockdowns.
Overall, 80% of the aesthetics customer base said the pandemic wouldn’t affect—or would have a minimal effect—on household income, according to data cited by Gonzalez on Friday’s call. Most said they would reschedule appointments shortly after offices reopen.
“Consumers have a strong desire to restart treatments, and they have the financial capacity to do so,” Gonzalez told analysts.
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After the 2008-2009 financial collapse, the aesthetics field saw a “very sharp V-shaped recovery,” Gonzalez said, and the field grew faster after the crisis than before. And this year in China, 86% of offices that administer the products have reopened following the COVID-19 pandemic, the CEO said.
Patient traffic in China is about 55% of that before the pandemic, and the volume of treatments is slightly under half of pre-COVID-19 levels. Those comparisons “look pretty encouraging,” the CEO said.
Outside of aesthetics, Gonzalez expects Allergan’s Botox therapeutic product to see a hit from the pandemic. “About half” of its treatment volume comes from hospitals, which have had to prioritize care for COVID-19 patients.
Of course, there’s much more to AbbVie than its Allergan buyout. The company is launching new immunology meds Skyrizi and Rinvoq, and it was riding strong momentum before lockdowns slowed new patient starts. Skyrizi generated $300 million in the first quarter, while Rinvoq pulled in $86 million.
Still, AbbVie has “no reason to believe” the momentum won’t return as lockdowns ease, Gonzalez said.
Behemoth Humira, meanwhile, pulled in $4.7 billion, handily beating analyst expectations even amid the pandemic disruption.
With the first-quarter performance of those meds and others, AbbVie lowered its EPS guidance slightly to between $7.60 and $7.70 per share, down from a prior range of $7.66 to $7.76. The company affirmed its previous forecast for adjusted EPS at $9.61 to $9.71.
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AbbVie made several assumptions in issuing its updated 2020 guidance. For one, it’s assuming lockdowns will be “gradually” lifted starting this month in the U.S. and Europe, and that in the following 60 days, doctors and hospitals will return to more normal care.
The company is also betting on a “modest increase” in patient assistance programs, plus a shift among U.S. patients toward government insurance due to increased unemployment, Gonzalez said. The company isn’t assuming any lockdowns this fall from a potential second wave of COVID-19.
