UEC - February 22nd, 2022
Today, we review comments by wordsmith Rob Michael, CFO of AbbVie, and his bullish outlook on recently acquired Botox during COVID-19
AbbVie (ABBV) is a pharmaceutical firm, most widely known for Humira. Humira is the worlds best selling drug, but it loses US patent protection in 2023. To offset this loss of sales, ABBV announced the acquisition of Allergan (AGN) in 2019 (closed in 2020). Allergan is the maker of Botox, which most people know of for its fame in cosmetic use (but also for neurological disorders)
The analyst community was concerned by Q2 2020 that Botox sales would get crushed by curtailed social activity. Why would you need Botox when stuck at home? Also, Botox is a highly discretionary product that is not covered by insurance when used for cosmetic purposes. In the case of financial distress, its an obvious candidate for a personal budget cut
Mr. Michael had a different take. On a June analyst call, he was asked for his view on the recovery of Botox cosmetic:
Q: Can you dig deeper into the Botox cosmetics business and how you view the recovery?
A: Growing in younger populations, particularly millennials… product can be viewed as a luxury good… the idea that people are on Zoom calls all day still has people concerned with the way they look
I literally laughed out loud when he said that. I was in awe of the ability to twist a clear negative into a growth driver. Turns out, he was completely correct…
Botox cosmetic sales fell 13% and 47% in Q1 2020 and Q2 2020 respectively vs prior year. However, by Q4 2020 sales were up 8.4%! Thats compared to pre-COVID sales, which occurred under Allergan’s watch. As we all recall, COVID was raging at that time, and most white collar workers were being told “you’re on mute”. Several media articles (NY Post, BBC) confirm the millennial/Zoom call narrative proposed by Michael
On a serious note, Michael also committed the company would pay down $17bn of debt due between May 2020 and 2021 year end. He was correct on that as well. On a relative basis, Rob Michael’s word is pretty reliable
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