Porter’s Five Forces Analysis of AbbVie
Key Facts
| Name | AbbVie Inc. |
| Industry | Drugs & Biotechnology |
| Founded | 2013 |
| Headquarters | North Chicago, Illinois in USA |
| CEOs | Richard A. Gonzalez |
| Revenues | $56.2billion,2022 |
| Profit | $11.5billion, 2022 |
| Competitors | Johnson & Johnson, AstraZeneca, Roche, Pfizer, Novartis and Merck & Co |
Company Overview
AbbVie, Inc. is a biopharmaceutical firm that conducts research as well as develops and distributes prescription medications. AbbVie’s annual revenue for 2022 was $56.2 billion, a 3.3% increase over 2021. AbbVie’s total assets for the fiscal year ending by December 31, 2022 were $146.5 billion. AbbVie is the world’s second largest pharmaceutical firm in terms of revenue generation. AbbVie has more than 50,000 employees working in 70 above countries. The company was founded on October 19, 2013 and is situated in North Chicago, Illinois, USA.
Porter’s Five Forces Analysis of AbbVie
AbbVie Rivalry among Existing Competitor
- AbbVie Business Segments: It emphasizes upon the treatment of chronic autoimmune diseases in dermatology and rheumatology. Also it strives in the fields of gastroenterology and oncology such as blood cancers. AbbVie deals with treatment of diseases caused by viruses, including human immunodeficiency virus (HIV) and hepatitis C virus (HCV). AbbVie deals with treatment of neurological disorders, like Parkinson’s disease. It conducts research and manufacturing for various thyroid diseases, metabolic diseases. AbbVie produces medication for cystic fibrosis and the pain associated with endometriosis, also it produces products for serious health conditions.
- AbbVie Global Operations Year 2021: AbbVie’s announced its revenue in 2021 as $56.2 billion, that is a 22.69% increase from 2020. Global net revenues of AbbVie moved up by 23%including growth across its hematologic cancer, immunology, neurology, eye care and aesthetics division.The growth was also recorded in the AbbVie business segment calledAllergan Aesthetics.
- Johnson & Johnson: Johnson & Johnson is a holding firm that specializes in the research and development of health-care products.Johnson & Johnson’s total assets for the fiscal year endingSeptember 30, 2022 were $175.12 billion.For the year 2022, Johnson & Johnson’s revenue generated was $96.04 billion.
- Roche Holding: Roche Holding AG is a pharmaceutical research firm.Fritz Hoffmann-La Roche founded the company on October 1, 1896, and it is headquartered in Basel, Switzerland.The corporation’s revenue in 2022 was $68.7 billion. Roche has $101.3 billion in assets and profits at Roche totaled $15.2 billion.
- Merck: Merck & Co., Inc. provides health solutions through medications, biologic treatments, animal health, vaccines and consumer care products. In 2022, it generated $50.4 billion in revenue and $13 billion in profits. It has assets of $105.7 billion.
- Investment in Research & Development-Marketing Cost and Brand Image: The reason for AbbVie business success is their constant effort to innovate medicines. Allergan Aesthetics is an AbbVie division that announced the acquisition of Soliton, Inc in 2021. The adoption of Soliton and its technology expands Allergan Aesthetics’ line of non-invasive body shaping treatments and will include a proven therapy for cellulite.
AbbVie Threat of New Entrants
- Global Pharmaceutical Industry:Pharmaceuticals revenue is expected to hit $1,163.00 billion in 2023. Drugs for Oncology are the industry’s biggest sector, with a predicted market volume of US$202.30 billion in 2023. Revenue is expected to increase at a 5.39% annual rate, resulting in a market volume of US$1,435 billion till 2027.
- High Capital Investment- Trained Human Resources: The constant innovation based firm AbbVie relies on its trained and qualified workforce for successful medication trails and manufacturing processes as highlighted by AbbVie in their Annual report 2021. During COVID-19 they continued to perform the trails and launched lifesaving drugs in the market.
- High Research & Development Cost: AbbVie managed to spend around 7.1 billion US dollars on research and development in year 2021.AbbVie’s research is enabled by prominent researchers and facilities, that employed 8,000 above individuals.
- Technological Advancement: In 2021 AbbVie disclosed in their annual reports that they presented six documents from its leading aesthetic treatments and products at the American Society for Dermatologic Surgery meeting. In this conference AbbVie emphasized the approach to innovative science and its interest in introducing effective treatments around the world. The research papers summary based on Two Botox Cosmetic were announced as “Best of Cosmetic Oral Abstracts”.
AbbVie Bargaining Power of Suppliers
- Supplies Industry Influencer: During COVID-19 due to the restrictions supply chain of pharmaceutical products was affected however, AbbVie continued to supply medication withoutany issues. After COVID-19 lockdown was uplifted AbbVie is closely monitoring and taking efforts to prevent any supply constraints that may compromise product demand fulfilment.
- Suppliers Collaboration: AbbVie massively relies on the supply of raw material from its suppliers and any disruption in the supply chain process can affect the overall manufacturing and distribution process. Hence AbbVie indicated that it has collaborated with their suppliers to carefully handle the process to avoid any discrepancies for their drug trails and distribution.
AbbVie Bargaining Power of Buyers
- High Product Differentiation: AbbVie’s products and services contain a diverse range of medications. AbbVie invested $5.8 billion for Stemcentrx in 2016. Stemcentrx develops drugs for cancer treatment. AbbVie took this decision as a strategy to strengthen its cancer research department.AbbVie acquired Allergan, an Irish medicine producer by paying $63 billion in 2020.
- Customer Satisfaction – After Sales Services: AbbVie takes into consideration the demand and preferences of their customers for different medications. Therefore, AbbVie efficiently handles the supply of medication to its customers within USA and across other countries. AbbVie carefully protects the sensitive information of their customers obtained for clinical trials or business dealings.
- Government Rules & Regulations: AbbVie follows the strict government guidelines and laws for manufacturing and distribution of medicines within USA, Europe and other countries.
AbbVie Threat of Substitute Products or Services
- Life Saving drugs: The pharmaceutical industry has grown significantly over the last twenty years. As per Statista global revenues of pharmaceutical sector estimated to have reached 1.42 trillion US dollars in 2021.
- Brand Loyalty: AbbVie is one of the world’s largest, biotech-focused corporations. It has Humira, an anti-inflammatory medicine created by AbbVie, gained more than $20 billion revenue globally by 2021.AbbVie is mainly recognized for developing Humira, a drug used to treat rheumatoid arthritis and Crohn’s disease. Celexa for depression is one of the most well-known AbbVie produced medicines.
- Post-COVID 19 Market: AbbVie has preclinical cancer research partnership arrangement with the University of Chicago until 2025. AbbVie will continue to collaborate to develop research in numerous areas, with an emphasis on cancer. AbbVie will obtain an access for an exclusive license to specific University of Chicago innovations produced.
References
- Forbes, Profile, AbbVie
- Forbes, Profile, Roche Holding
- Forbes, Profile, Merck & Co.
- Forbes, Profile, AbbVie
- Statista (January 2023) Revenue of the worldwide pharmaceutical market from 2001 to 2022(in billion U.S. dollars)| Statista. Availableat.Statista
- Statista (November 2022) Select top global biotechnology companies based on market capitalization as of 2022(in billion U.S. dollars)| Statista. Availableat.Statista.
- Statista (November 2022) Select top global biotechnology companies based on market capitalization as of 2022(in billion U.S. dollars)| Statista. Availableat Statista
- Fortune 500 – AbbVie, Available at AbbVie
- AbbVie News Centre. Available at AbbVie
- Statista (September, 28, 2022) |Health, Pharma &Medtech – Pharmaceutical Products & Market – Global pharmaceutical industry – statistics & facts| Statista. Availableat. Statista.
- AbbVie Inc. website. Available at AbbVie
- AbbVie Inc.Annual Report 2021. Available at AbbVie