1. Jack Shen
Moby Xu
4/26/2016

2. Current Holdings Ticker: ABBV (NYSE)
Received 400 shares upon spin-off on 1/2/2013
200 $27.08
100 $27.53
100 $34.22
Adjusted
Current Price: $60.97
Gain (loss):128.27%
16% of portfolio (equity only)

3. Company Overview Corporate Headquarters North Chicago, Illinois, USA
Business Snapshot
Specialty-focused, research-based biopharmaceutical company
Employees
More than 28,000 worldwide
Geographic Coverage
Products are sold in more than 170 countries

4. Timeline
2011
October 19th
Abbott announced the plan to separate into two publicly traded companies
2013
January 2nd
Officially listed on the NYSE
2015
May 26th
Completed the acquisition of Pharmacyclics
2016
April
Revealed positive data on HCV therapy and leukemia treatment

5. Management RICHARD A. GONZALEZ MICHAEL E. SEVERINO, M.D.
Chairman of the Board and CEO
Mr. Gonzalez was a 30-year Abbott veteran. He served as Executive
Vice President, Pharmaceutical Products Group.
MICHAEL E. SEVERINO, M.D. 
Executive Vice President, Research & Development and CSO 
He previously served as Senior Vice President, Global Development and
Corporate Chief Medical Officer at Amgen Inc. He joined AbbVie in 2014.
WILLIAM J. CHASE
Executive Vice President, CFO
Prior to AbbVie's separation from Abbott, Mr. Chase served as Vice President, Licensing and Acquisitions. Mr. Chase joined Abbott in 1989
Source: abbvie.com

6. Business Overview Focus on product development:
“AbbVie develops and markets advanced therapies that address some of the world's most complex and serious diseases.”
chronic autoimmune diseases
human immunodeficiency virus (HIV)
Parkinson's disease
complications associated with chronic diseases
other health conditions
Focus on product development:
Global R&D collaboration and licensing agreement
Independent R&D
Acquired in-process R&D
Source: abbvie.com, Abbvie Inc. FY K

7. Financial Results FY 2015: Total Net revenue: $22859 million
Total Net Income: $5,144 million
Source: Abbvie Inc. FY K

8. Industry Overview Name Brand Pharmaceutical “Big Pharma”
Mature industry
Heavily regulated
R&D intense
Risky
Intense competition
Source: IBIS World

9. Macro Driver
Source: CMS, Census Bureau, IBIS World

10. Patent-protected drugs; Threat of R&D breakthrough
Porter’s Five Forces
Supplier
Bargaining Power
Moderate
Self-sufficient;
Lots of suppliers
Threat of
Substitutes
Low-Moderate
Patent-protected drugs; Threat of R&D breakthrough
New Entrants
Low
Regulation;
Finance;
Tech
Threat of Rivalry
High
Intense competition;
Risky business
Buyer
Lack alternatives;
Necessity
Pharmaceutical
Industry

11. SWOT Analysis Strengths Weaknesses Opportunities Threats
Large cash reserve;
R&D capability;
Established brand;
Expertise & experience
Weaknesses
HUMIRA;
Risky R&D process
Opportunities
Economic recovery;
International mkt;
Aging & growing population
Threats
Mkt fluctuation;
Competition;
Regulation;
IP theft

12. Financial Analysis
Source: Abbvie Inc. FY 2015& K

13. Financial Analysis
Source: Abbvie Inc. FY 2015& K

14. Technical Analysis
Source: Yahoo Finance

15. Market Capitalization Latest
Comparable Analysis
Company Name
Market Capitalization Latest
LTM Total Revenue
LTM Gross Margin %
LTM EBITDA Margin %
LTM EBIT Margin %
LTM Net Income Margin %
Baxalta Incorporated (NYSE:BXLT)
28,266.0
6,148
81%
49%
39.8%
32.03%
Biogen Inc. (NasdaqGS:BIIB)
61,925.9
10,936
88%
71%
68.0%
55.48%
Eli Lilly and Company (NYSE:LLY)
82,131.4
19,959
89%
54%
48.3%
33.79%
Amgen Inc. (NasdaqGS:AMGN)
122,397.8
21,662
38%
28.1%
14.25%
Gilead Sciences Inc. (NasdaqGS:GILD)
138,078.6
32,639
76%
26%
18.8%
12.07%
Merck & Co. Inc. (NYSE:MRK)
157,153.4
39,498
63%
37%
20.8%
11.25%
Pfizer Inc. (NYSE:PFE)
206,003.8
48,851
62%
34%
30.1%
15.55%
AbbVie Inc. (NYSE:ABBV)
99,361.3
22,859
43%
38.9%
22.50%
High
Low
Mean
113,708.1
25,670
77%
44%
36.3%
24.92%
Median
Source: CapitalIQ

16. Comparable Analysis

17. Financial Projections

18. Discount Rate

19. DCF Analysis

20. Pros & Cons Pros Cons Overpriced according to DCF valuation
Favorable results
Optimistic analysis & reports
Potential share repurchase shows confidence
Growing # of collaboration and licensing agreement
Cons
Overpriced according to DCF valuation
“New company”
HUMIRA “ticking time bomb”
Risky pipeline
Complicated business

21. Hold Recommendation DCF Current Comparable Valuation Valuation Price
$43.31
Current
Price
$60.97
Comparable Valuation
$70-$80
Hold

22. Q&A