AbbVie - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 was a clear beat: adjusted EPS of $2.46 vs Wall Street consensus $2.40, and revenue of $13.343B vs consensus ~$12.921B; management raised FY25 adjusted EPS guidance to $12.09–$12.29 (includes $0.13 IPR&D headwind) and lifted product sales outlooks for Skyrizi and Rinvoq. The beats were driven by outsized Immunology growth (Skyrizi +70.5% YoY; Rinvoq +57.2% YoY) and Neuroscience strength; Aesthetics remained soft.
• Strong ex-Humira platform offset accelerated Humira erosion; FY25 revenue forecast increased ~$0.7B to ~$59.7B with notable guidance raises for Skyrizi (+$0.6B to $16.5B) and Rinvoq (+$0.3B to $8.2B), while U.S. Humira was cut by $0.5B to $3.5B and Aesthetics trimmed by ~$0.2B.
• Strategic momentum: U.S. FDA approved Rinvoq for GCA (9th U.S. indication) post-quarter; Teliso-V NSCLC ADC approval anticipated in 1H 2025; Tavapadon Phase 3 results supportive; expanding ADC pipeline (ABBV-400, ABBV-706) and obesity program (ABBV-295 amylin analog).
• Risk watch: sectoral tariff discussion (unquantified), Medicare Part D redesign headwind, and Aesthetics macro weakness (U.S. and China) remain overhangs; management outlined mitigation levers and reiterated long-term “high single-digit” revenue CAGR through 2029 and an 8-year growth runway.

What Went Well and What Went Wrong

What Went Well

• Immunology outperformance: Global net revenues $6.264B (+16.6% YoY); Skyrizi $3.425B (+70.5% YoY) and Rinvoq $1.718B (+57.2% YoY) drove the beat; CEO: “first-quarter results were well ahead of our expectations” and raised FY guidance.
• Neuroscience strength: $2.282B (+16.1% YoY) with VRAYLAR $765M (+10.3%), Botox Therapeutic $866M (+15.8%), and oral CGRP combined $433M; management highlighted double-digit operational growth across all three therapies.
• Guidance raise and pipeline catalysts: FY25 adjusted EPS guidance raised to $12.09–$12.29 (includes $0.13 IPR&D); FY revenue guide to ~$59.7B; product guides increased (Skyrizi +$600M; Rinvoq +$300M); Teliso-V approval expected in 1H 2025; FDA approved Rinvoq for GCA after quarter.

What Went Wrong

• Humira decline accelerated: Global Humira $1.121B (-50.6% YoY), with faster share erosion and molecule compression; U.S. Humira FY25 cut by $0.5B to $3.5B.
• Aesthetics softness: Portfolio $1.102B (-11.7% YoY); Botox Cosmetic $556M (-12.3% YoY) and Juvederm $231M (-22.2% YoY); management moderated FY assumptions amid economic headwinds and China weakness.
• Tariff overhang and Part D headwind: Sectoral tariffs (unquantified) not in guidance; Medicare Part D redesign is a growth headwind in 2025; management discussed mitigation and U.S. manufacturing footprint but cannot pass tariffs to customers easily.

Transcript

Operator (participant)

Welcome to the AbbVie First Quarter 2025 Earnings Conference Call. All participants will be able to listen only until the question-and-answer portion of this call. You may ask a question by pressing star one on your phone. As a reminder, this call is being recorded. I would now like to introduce Liz Shea, Senior Vice President, Investor Relations.

Liz Shea (SVP of Investor Relations)

Good morning, and thanks for joining us. Also on the call with me today are Rob Michael, Chief Executive Officer; Jeff Stewart, Executive Vice President, Chief Commercial Officer; Roopal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer; and Scott Reents, Executive Vice President, Chief Financial Officer. Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in our forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. AbbVie undertakes no obligation to update these forward-looking statements except as required by law. On today's conference call, non-GAAP financial measures will be used to help investors understand AbbVie's business performance.

These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Following our prepared remarks, we'll take your questions. With that, I'll turn the call over to Rob.

Rob Michael (Chairman and CEO)

Thank you, Liz. Good morning, everyone, and thank you for joining us. AbbVie is off to an excellent start to the year with first-quarter results exceeding expectations across several of our therapeutic areas. We also continue to advance our promising internal pipeline and add external opportunities to further strengthen our business and long-term outlook. Turning to our first-quarter performance, we delivered adjusted earnings per share of $2.46, which is $0.10 above our guidance midpoint. Total net revenues were more than $13.3 billion, nearly $550 million ahead of our expectations. I'm especially pleased with the performance of our HUMIRA platform, which delivered robust sales growth of more than 21%. Immunology, neuroscience, oncology, and aesthetics are all performing at or above our expectations, and we are well positioned to exceed our previous peak revenue in just the second full year following the U.S. HUMIRA LOE.

Based on this strong performance, we are raising our full-year adjusted earnings per share guidance by $0.10 and now expect adjusted EPS between $12.09 and $12.29. As you are aware, there is speculation that sectoral tariffs could be forthcoming. Any related impact from these tariffs, as well as other potential new or reciprocal tariffs, have not been contemplated in our guidance. To the extent there is an impact, we believe it would be in line with our peers, given that AbbVie has an extensive manufacturing presence in the U.S., including API, biologics, toxins, and small molecules. Over the next decade, we anticipate investing more than $10 billion of capital in the U.S. to support our volume growth and our expansion into new areas such as obesity.

Turning back to our performance, I'm very pleased with the excellent progress we are making with several pipeline programs that have the potential to be meaningful sources of growth. These include Lutikizumab across several immunology indications, 3A3 in multiple myeloma, and our next-generation ADCs, including Temab-A for several solid tumor types and 706 for small cell lung cancer. We also continue to add depth to our pipeline with strategic transactions that can help drive growth in the next decade. This includes the recent acquisition of Nimble Therapeutics to expand our immunology portfolio with oral peptides, as well as the license agreement with Gubra to develop an amylin analog for the treatment of obesity. Obesity represents a significant global health concern with high unmet need. This market will continue to evolve with improved offerings, and we believe our program with Gubra has the potential to deliver a differentiated asset.

Going forward, we plan to invest further in obesity along with other opportunities across our existing five key growth areas. In summary, the fundamentals of our business are strong, and we are well positioned for the long term. AbbVie has a clear runway to growth for at least the next eight years, including a high single-digit revenue CAGR through 2029. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff.

Jeff Stewart (EVP and Chief Commercial Officer)

Thank you, Rob. I'll start with the quarterly results for immunology, which delivered total revenues of more than $6.2 billion, exceeding our expectations. SKYRIZI and RINVOQ are performing exceptionally well, contributing $5.1 billion in combined sales this quarter, reflecting growth of more than 65%. I'm especially encouraged with our portfolio performance across IBD, where SKYRIZI and RINVOQ continue to capture a significant share, given their efficacy, safety, and dosing profiles. In Crohn's disease, which is roughly two-thirds of the overall IBD market, these two treatments together are capturing roughly one out of every two in-play patients in the U.S., and total prescription share is now in the mid-teens. Internationally, our Crohn's portfolio has achieved in-play leadership in nearly a dozen key countries. In ulcerative colitis, SKYRIZI has already achieved the leading in-play share in the U.S. following the launch in the second half of last year.

SKYRIZI and RINVOQ together are now capturing one out of every three in-play UC patients, a very strong leadership position for AbbVie. We are also seeing strong momentum across indications in dermatology and rheumatology as well. For SKYRIZI, we continue to gain share in psoriatic disease, where we have achieved the leading in-play share of new and switching patients in nearly 30 countries and see substantial room for total share growth. For RINVOQ, we are seeing increasing prescription demand globally across each of the rheum indications, as well as additional momentum in atopic dermatitis, the fastest-growing immunology market, where we have two compelling head-to-head studies versus Dupixent. We are also preparing for the global launch of giant cell arteritis, another new source of growth for RINVOQ. We received European approval earlier this month and expect FDA approval soon.

The addition of this indication further rounds out RINVOQ's rheumatology label and gives patients with GCA access to a new compelling oral therapeutic option. Overall, SKYRIZI and RINVOQ are demonstrating impressive results across all of their approved indications, and we will be raising our full-year sales guidance for both products. Turning now to HUMIRA, which delivered global sales of $1.1 billion, down 49.5% on an operational basis, below our expectations, primarily due to faster share erosion from biosimilar competition, as well as further molecule compression in the U.S. As a result, we will be lowering our full-year sales guidance for U.S. HUMIRA. Moving to oncology, where total revenues were $1.6 billion, exceeding our expectations. Imbruvica global sales were $738 million, down 11.9%, reflecting competitive dynamics in CLL. Venclexta global revenues were $665 million, up 12.3% on an operational basis.

This strong performance reflects continued momentum in CLL, as well as shared leadership in frontline AML among patients who are ineligible for intensive induction chemotherapy. We also have an emerging commercial portfolio in solid tumors. This includes ELAHERE, our leading ADC for ovarian cancer, with global sales of $179 million, as well as telisotuzumab vedotin, a potential new medicine for late-line non-small cell lung cancer patients, with U.S. regulatory approval and commercialization expected in the next couple of months. Telisotuzumab vedotin will be supported by a dedicated sales force and medical affairs team, which will target academic and community cancer treatment centers to reinforce the importance of c-Met as a biomarker and build relationships that support our emerging solid tumor franchise. Turning now to aesthetics, which delivered global sales of $1.1 billion, down 10.2% on an operational basis. This was in line with our expectations.

BOTOX Cosmetic global revenues were $556 million, down 10.7% on an operational basis, and JUVÉDERM sales were $231 million, down 20% on an operational basis. As we have seen over the last several quarters, economic headwinds have continued to impact market conditions. Based on the trends we are seeing, including a decline in recent consumer sentiment, we are moderating our assumptions for category growth globally and adjusting our full-year sales guidance for aesthetics accordingly. While near-term aesthetics market conditions remain challenging, the long-term prospects for the category remain attractive, given high consumer interest and low penetration rates for facial injectables. I'm particularly excited about Bonti, our fast-acting, short-duration toxin, which we recently submitted for U.S. regulatory review. This first-in-class toxin represents a distinctive innovation for the treatment of glabellar lines and has the potential to be an important catalyst for new patient activation into the facial aesthetics category.

We anticipate commercialization next year. Moving now to neuroscience, where total revenues were approximately $2.3 billion, up 17% on an operational basis, with all key products exceeding our expectations. VRAYLAR Global sales were $765 million, up 10.3%, reflecting share capture in both bipolar I disorder and adjunctive major depression. We continue to get very positive feedback on VRAYLAR's profile in terms of dosing flexibility, low sedation, and the ability to treat a full spectrum of symptoms. We are very competitively positioned with our migraine portfolio, where all three of our therapies continue to deliver double-digit operational growth. BOTOX Therapeutic Global Revenues were $866 million, up 17%. Ubrelvy Global Sales were $240 million, up 18%, and QULIPTA Global Revenues were $193 million, up 48.3%. In Parkinson's disease, VYALEV Global Sales were $63 million, reflecting continued strong uptake in Japan and Europe.

We are also pleased with the early launch feedback in the U.S., where revenues are expected to ramp gradually over the next couple of quarters as we work to establish the appropriate Medicare coverage and benefit determination. Lastly, we are making excellent progress with the development of Tavapadon in Parkinson's disease. This first-in-class D1/D5 selective dopamine agonist has a favorable benefit risk profile and the potential to differentiate in several areas, such as sedation and impulse control. Tavapadon could potentially be used as a monotherapy for early Parkinson's disease, as well as an adjunctive therapy to levodopa for more advanced patients, which would be a complementary addition to our existing PD portfolio with VYALEV and Duopa. We expect to submit Tavapadon for regulatory review later this year, with commercialization expected in 2026. Overall, I'm extremely pleased with the execution and strong momentum across our commercial portfolio.

With that, I'll turn the call over to Roopal for comments on our R&D highlights. Roopal.

Roopal Thakkar (EVP of Research and Development and Chief Scientific Officer)

Thank you, Jeff. I will start with immunology. We received European approval for RINVOQ in GCA and expect FDA approval soon. We remain on track for several important data readouts this year, as well, including phase three data for RINVOQ in Alopecia Areata and Vitiligo, and data from SKYRIZI's head-to-head study in psoriasis versus soticizumab. Our early and mid-stage immunology pipeline continues to advance. Recent initiations include a phase two study evaluating SKYRIZI in combination with Lutikizumab in psoriatic arthritis, and a phase one study for our next-generation TL1A antibody, which is designed to have less frequent dosing compared to other TL1As in development, and will be evaluated in combination with SKYRIZI in both Crohn's disease and ulcerative colitis. This summer, we will start a phase two study evaluating a combination of Lutikizumab and our anti-CD40 rabagalimab in rheumatoid arthritis.

Moving to our ADCs and oncology, we anticipate accelerated approval in the second quarter for Telisotuzumab Vedotin as a monotherapy in previously treated non-squamous non-small cell lung cancer with high c-Met expression. This is a segment of lung cancer with high unmet need, and when approved, Telisotuzumab Vedotin will be the first c-Met-directed ADC for these patients. We're also making good progress with Temab-A, our next-generation c-Met ADC. A phase two dose optimization study evaluating Temab-A with a PD1 inhibitor as a frontline combination therapy in EGFR wild-type non-small cell lung cancer was recently initiated. In the EGFR mutant segment, we plan to initiate studies for Temab-A as a monotherapy in the second-line setting and in combination with osimertinib in the first-line setting. Preliminary phase one results will be presented at the upcoming ASCO meeting.

This year, phase two data from our CRC study evaluating Temab-A in combination with bevacizumab will be available, which could enable a phase three study in an all-comers population. Progress also continues with ABBV-706 in small cell lung cancer. Recall, this ADC utilizes the same topo warhead and linker technology as Temab-A, but with an antibody that targets SEZ6. In the phase one study, 706 was efficacious across doses, with an objective response rate of approximately 60% in patients with relapsed or refractory small cell lung cancer. Based on maturing duration of response and progression-free survival data, we plan to advance 706 into a trial in a relapsed refractory population and a dose optimization study in combination with a PD-L1 in the frontline, with the goal of establishing a chemosparing regimen as a new standard of care.

In the area of hematologic oncology, the data readout remains on track for the phase three Venclexta MDS trial, and if positive, our regulatory submissions would follow later in the year. A regulatory submission for PVEK and BPDCN is also planned for this year. We continue to make good progress with our BCMA CD3 bispecific ABBV-383 in multiple myeloma. Recruitment is going well in the phase three monotherapy study in later lines, and we are on track to be fully enrolled by early next year. Additionally, we continue to evaluate 383 in various combinations, including with Pomalyst, Revlimid, Darzalex, and Iberdomide. We'll begin seeing data from these combinations next year, which could enable phase three studies in earlier lines of therapy. Now, moving to neuroscience, serum data from the long-term Tempo IV phase three study continue to support Tavapadon's favorable benefit risk profile.

Efficacy in both early and advanced Parkinson's patients was maintained beyond a year, and the safety profile was consistent with that observed in the previous phase three studies, with no new safety concerns identified. Rates of adverse events of special interest remain low, with impulse control disorder and peripheral edema less than 1%, dyskinesia approximately 2%, and sedation less than 5%. These results underscore Tavapadon's potential to become an important new treatment option for patients with Parkinson's disease. Our regulatory application is planned for later in the year. Moving to other areas of our pipeline. In aesthetics, the regulatory application for our rapid-onset, short-acting toxin Bonti was recently submitted. We also began the clinical program to evaluate co-administration of Bonti and BOTOX, which has the potential to be co-formulated as a novel product, offering the combined benefits of rapid onset and BOTOX-like duration.

In obesity, our partner Gubra recently announced positive interim results from the first part of a multiple ascending dose study for our long-acting amylin analog, ABBV-295. This initial phase of the study tested 1 and 2 milligrams, dosed once weekly for six weeks in healthy, lean, and overweight patients. The study showed 295 performed well, demonstrating a dose-dependent mean weight loss compared to placebo and a tolerability profile consistent with the results from the single ascending dose study. Mean weight loss in the 2-milligram cohort, which had a mean BMI of 24, was 7.8%, compared to a weight gain of 2% in the placebo arm on day 43. The second phase of this study is ongoing and is evaluating higher doses in overweight and obese patients with 12-week dosing. Titration and longer dosing intervals will also be assessed. Full data from this part of the study are expected next year.

To summarize, significant progress continues with our pipeline, and we look forward to important data readouts, regulatory submissions, and approvals throughout 2025. With that, I'll turn the call over to Scott.

Scott Reents (EVP and CFO)

Thank you, Roopal. Starting with our first quarter results, we reported adjusted earnings per share of $2.46, which is $0.10 above our guidance midpoint. These results include a $0.13 unfavorable impact from acquired IP R&D expense. Total net revenues were more than $13.3 billion, reflecting robust growth of 9.8% on an operational basis, excluding a 1.4% unfavorable impact from foreign exchange. Adjusted gross margin was 84.1% of sales, adjusted R&D expense was 15.4% of sales, and adjusted SG&A expense was 24.6% of sales. The adjusted operating margin ratio was 42.3% of sales, which includes a 1.9% unfavorable impact from acquired IP R&D expense. Net interest expense was $627 million. The adjusted tax rate was 14.2%. Turning to our financial outlook, we are raising our full-year adjusted earnings per share guidance to between $12.09 and $12.29.

Please note that this guidance does not include an estimate for acquired IP R&D expense that may be incurred beyond the first quarter. We now expect total net revenues of approximately $59.7 billion, an increase of $700 million. This reflects an estimated 0.6% unfavorable impact from foreign exchange on full-year sales growth. This updated revenue forecast includes the following approximate assumptions for several of our key products. We now expect SKYRIZI global revenues of $16.5 billion, an increase of $600 million, reflecting share gains in psoriasis and IBD. RINVOQ global sales of $8.2 billion, an increase of $300 million, reflecting momentum across all approved indications. U.S. HUMIRA revenues of $3.5 billion, a decrease of $500 million, reflecting higher erosion from biosimilar competition, as well as further molecule compression. BOTOX therapeutic global sales of $3.6 billion, an increase of $100 million, reflecting growth in chronic migraine and other indications.

Total oral CGRP revenues of $2.2 billion, an increase of $100 million, reflecting strong prescription demand. Imbruvica global revenues of $2.8 billion, an increase of $100 million, reflecting lower erosion. Venclexta global sales of $2.7 billion, an increase of $100 million, reflecting continued uptake in both CLL and AML across our key countries. For aesthetics, we now expect global sales of $5.1 billion, as we are moderating our assumptions for market growth globally. As a result, total sales guidance for BOTOX and JUVÉDERM will each be lower by roughly $100 million. Moving to the P&L for 2025, we continue to forecast full-year adjusted gross margin of approximately 84% of sales and adjusted SG&A expense of approximately $13.2 billion. We now expect adjusted R&D expense of approximately $8.9 billion, reflecting additional investment in our robust pipeline for long-term growth.

We also now anticipate an adjusted operating margin ratio of roughly 46.5% of sales, in line with our previous expectations after including the 0.4% unfavorable impact of acquired IP R&D expense incurred through the first quarter. Turning to the second quarter, we anticipate net revenues of approximately $15 billion. This reflects an estimated 0.3% unfavorable impact from foreign exchange on full-year sales growth. We are forecasting an adjusted operating margin ratio of roughly 49.5%. We expect adjusted earnings per share between $3.26 and $3.30. This guidance does not include acquired IP R&D expense that may be incurred in the quarter. Our guidance is based on current trade rules and does not reflect the impact of any additional trade policy shifts, including pharmaceutical sector tariffs.

While it's difficult to quantify in the absence of actual policy details, it's worth noting any related unfavorability in 2025 would reflect a partial year, given the timeline for a 232 investigation. We are actively preparing for a number of potential scenarios and would expect to put into place mitigation strategies as we have more information. Relevant to these dynamics, I would also highlight that AbbVie has a significant U.S. manufacturing presence that spans 11 sites, with plans to add four new manufacturing plants to our network, expanding our production for API, drug product, peptides, and devices in the United States. As we continue to invest and grow our U.S. operational footprint, we believe a more competitive tax policy, building on what was accomplished through 2017 tax reform, will encourage a sustainable shift towards U.S. manufacturing over the long term.

In closing, I'm very pleased with the excellent start to the year. We are demonstrating strong momentum across the portfolio and continue to be well-positioned to deliver robust growth in 2025 and beyond. With that, I'll turn the call back over to Liz.

Liz Shea (SVP of Investor Relations)

Thanks, Scott. We will now open the call for questions. In the interest of hearing from as many analysts as possible over the remainder of the call, we ask that you please limit your questions to one or two. Operator, first question, please.

Operator (participant)

For our first question, we'll go to the line of Chris Schott from J.P. Morgan. Please go ahead.

Chris Schott (Managing Director)

Great. Thanks for the question and congrats on the results. Just two for me. Maybe first on SKYRIZI and RINVOQ, obviously some big step up in the guidance here. Can you just elaborate a little bit more on which of the indications are most attributable to the upside we're seeing right now? Maybe just talk a little bit about the competitive landscape, maybe particularly Trimthia more broadly launching in IBD and how you're thinking about that dynamic. My second question was on second immunology on HUMIRA. Can you just talk a bit more about how you're thinking about the tail for HUMIRA in light of some of the erosion that you're seeing this year? Thanks so much.

Scott Reents (EVP and CFO)

Chris, this is Scott. I'll start with kind of where we saw the increase attributed to for the various indications, then I'll turn to Jeff for your other questions. We raised SKYRIZI by $600 million to $16.5 billion. That's split between $200 million in psoriatic and $400 million in IBD indications. With respect to RINVOQ, we raised that $300 million, and that's across all of the approved indications. You can attribute that to $100 million for rheumatology, $100 million for derm, and the remaining $100 million for IBD.

Jeff Stewart (EVP and Chief Commercial Officer)

Yeah, thanks. Chris, it's Jeff. Maybe I'll give some sense. We're obviously very, very pleased with the performance of SKYRIZI and RINVOQ in immunology, as you've seen from the report. Maybe to give some perspective, it's not uncommon to start to see in-class competition. We've seen that in psoriasis. We've seen that across the board. Maybe I'll just give a little bit of a perspective over sort of the historical dynamics that we've seen with the IL-23 category. For example, if you go back to like 2018, 2019, when the IL-23s were starting to come in psoriasis, the total patient share at that time in the early days was about 7% of the IL-23 class. Now it's over 60%. If we look at where IBD is, obviously we launched first with SKYRIZI in Crohn's, and everything's recently launching here at UC.

It's about 7% of the total patient share in IBD. You can imagine as we start to watch what this category is going to mean to transform IBD, we remain very confident. It's not a zero-sum game. We feel very confident in our profile and what we're able to deliver if we look across UC, if we look across our head-to-head data versus sequence versus the other trials. Net-net, we see very, very strong momentum across the board, regardless of competitors that may come in.

My thoughts on the HUMIRA tail, again, as I highlighted and Scott highlighted in his remarks, we are seeing a bit of faster erosions as the biosimilar start to play out. This is, of course, the third year of the biosimilar event, so it's really not too surprising. We also do continue to see the molecule continue to erode.

As we look, and we do not have full visibility, and we will be monitoring the 2026 axis as we go throughout the year, we do expect it to step down again. It just makes sense. That will be the fourth full year. We will have deeper visibility of that tail sometime over the course of the year. As we said before, the real impact of the tail is when HUMIRA does not have a meaningful headwind to our overall growth as a corporation. We expect that to start to develop over that 2026 time period.

Liz Shea (SVP of Investor Relations)

Okay. Thank you, Scott. Operator, or thank you, Chris. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Terrence Flynn from Morgan Stanley. Please go ahead.

Terence Flynn (Biotech and Biopharma Analyst)

Great. Thanks so much. Congrats on the quarter. Maybe two questions for me as well. You alluded to some of the mitigation strategies you're taking with respect to tariffs potentially. Could you just elaborate a little bit more there in terms of what that means for maybe inventory and then any contemplation on any changes to IP domiciling? The second question I had is on your amylin program there. I know you talked a little bit about next steps, but was just wondering if you can elaborate in terms of how much higher you're going on doses, what you'd expect that to translate to in efficacy, and maybe the size of those cohorts, like how many more patients will we get in this next update. Thank you.

Rob Michael (Chairman and CEO)

Thanks, Terrence. This is Rob. Scott and I will handle your first question, and Roopal will handle your second question. Just to, I think, back up and maybe talk about AbbVie's manufacturing network, and then I can mention how we're thinking about potential mitigation. I think it's important to know that we have a broad footprint that allows us to assure supply for our patients around the world. That's really why you've been able to see us avoid supply disruptions during events like the COVID pandemic. I mean, today, we have a robust U.S. manufacturing network with more than 6,000 American workers across 11 sites. As I mentioned in my remarks, that includes manufacturing of API, biologics, toxins, and small molecules. For example, our largest product, SKYRIZI, is made in the U.S. for the domestic market.

Given our expected volume growth and our expansion into areas like obesity, as I mentioned, we'll continue increasing our U.S. footprint with over $10 billion in planned capital investment during the next decade. In terms of potential mitigation, in the near term, we could take inventory management actions or secure alternate sources of API. We could also look at cost efficiencies and productivity initiatives as a source of mitigation, which we always do. I think what's more challenging is trying to pass the tariff impacts to our customers, especially with penalties in the government channel and with existing contracts in the commercial setting. I don't see that as a viable source for mitigation. In the longer term, we will add more U.S. manufacturing capacity, which is part of the planned capital investment of over $10 billion.

Specific to 2025, we would look to mitigate the impact as much as possible with a combination of supply chain actions, cost efficiencies, and any additional overperformance from our growth platform. In the meantime, we have enough confidence in the momentum of our business to raise our guidance this year, which should be viewed as a positive.

Scott Reents (EVP and CFO)

Yeah. Terrence, with respect to IP, IP has been looked at, I think, when people try to assess the impact of potential tariffs on our sector. IP has been looked at as kind of a proxy as to what that impact might be. Certainly, directionally, I think that is something that would be somewhat telling. That said, when we look at our profile overall, Rob mentioned the strong U.S. presence that we have, but we do not see our profile suggesting any sort of outsize impact for us as a company. The tax rate is something that you can look at, which is essentially when you think of the bookends of the minimum tax for earnings outside the U.S., for tax earned or income earned in the U.S., that really kind of aligns with where that IP is structured.

That blending of your incomes kind of produces generally, directionally, your tax rate. You see us being relatively in line with our peers. That suggests that we have a similar IP profile from an overall perspective. I'd also just quickly point out that sometimes with Allergan, as that was a company that we redomiciled back to the U.S., it was a foreign headquartered company. We called it Allergan was a series of several companies that were put together over a few years. Those companies all had a significant U.S. presence as well. Allergan's profile is not dissimilar from ours as a whole either. I think when you think about that IP profile, it's important from a tariff perspective. It's also very important from a tax reform perspective.

There was a lot of progress made in leveling the playing field for U.S. companies in 2017 tax reform that did a lot of good things and really helped invest in the U.S. as well as create a competitive environment for our companies. We see it as an important piece of building upon that tax reform to encourage further and long-term, as I mentioned in my remarks, sustainable investment. I see a tax reform initiative building on 2017 coupled with tariffs as something that will encourage U.S. manufacturing over the long term. We feel very good about our profile right now.

Roopal Thakkar (EVP of Research and Development and Chief Scientific Officer)

Hi, it's Roopal. I'll answer the 295 question regarding the multiple ascending dose study. Currently, with the data you've seen, we're at 1 and 2 milligrams. We have the opportunity here in this study to go several-fold higher than the 2 milligrams. We also have the opportunity to go beyond six weeks, namely around 12 weeks before we get into formal phase 2B, which I would say is around next year, which we would go quite a bit longer. The sample size, what you've seen here, maybe a little bit larger because of the multiple ascending dose format here. We'll see larger sample sizes once we get into the formal phase 2B. The other opportunities here are also to look at titration at the 1 milligram or maybe even lower. We don't see any adverse events beyond suppression of appetite.

There is an opportunity to be able to start low and start titrating up to doses quite a bit higher than 2 milligrams. We are open to watch this study and be flexible. The other important findings would be around muscle and bone. Those would be other things that will be evaluated, as well as looking at dosing. The half-life is around 270 hours. That could give us an opportunity to go twice a month and even potentially monthly. All that will be captured in this data set. We expect to see some data next year. That will allow us to best design a more formal phase 2B study.

Liz Shea (SVP of Investor Relations)

Thanks, Terrence. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Carter Gold from Cantor. Please go ahead.

Carter Gould (Managing Director and Senior Analyst)

Good morning. Thanks for taking the question. Obviously, there's been a lot of discussion around drug pricing kind of resurfacing and some rumblings around most favored nation kind of bubbling back to the surface. Wanted to get a sense of understanding of your expectations and flexibility if need be to take actions outside the U.S. Maybe more of a commercial question as we think about the potential co-administration of Bonti and BOTOX. Can you kind of help frame how you think that would impact the market? Is this something that could just grow the overall pie, move share, etc.? Any thoughts on that front would be appreciated. Thank you.

Rob Michael (Chairman and CEO)

Hey, Carter, it's Rob. I'll take your first question, and Jeff will take the second question. I think as we've studied the environment, I mean, we are very supportive of a balanced approach that addresses affordability while also encouraging innovation. You have seen many of our peers reinforcing the importance for the EU to properly value innovation, which we echo and would support any policies that encourage that outcome. That said, we hope the administration contemplates the harm that international reference pricing could have on U.S. healthcare, the U.S. healthcare industry, and future innovation. I think anything like price controls, cost increases, or higher taxes just leaves less investment available across the industry to advance new innovative medicines. That said, I'm very encouraged by the administration's willingness to address the pill penalty in the IRA, and as fixing that would support long-term innovation in our industry.

As we look at the push, I think, for the EU to more properly value the innovation is an absolute appropriate push. We're encouraged by some of the policies that really support innovation. Scott also talked about tax reform. I think that's an important lever as well as we think about what are the things that will drive investment in the U.S. and drive more innovation. I think if you just look at AbbVie as an example, we've invested over $5 billion of capital since tax reform in 2017. I mean, that includes a new oncology research center in South San Francisco. That includes SKYRIZI manufacturing capabilities in the U.S., eye care capacity expansion in Waco, Texas, and technology infrastructure upgrades across our footprint, just to name a few.

Importantly, as Scott mentioned, tax reform allowed us to acquire Allergan, an Irish domiciled company that we then redomiciled into the U.S. I mean, that transaction enabled AbbVie to continue increasing our R&D investment through the HUMIRA LOE, which is unprecedented. That will ultimately help us really lead to more innovation in our pipeline and ultimately impact patients in the future. When we think about policy, we think tax reform has provided the right incentives to invest more in the U.S. and more in innovation. That is what we would encourage. Yeah. Thank you for the question. Let me give a quick update on the Bonti and the combination approach in terms of how we're starting to think about it. Obviously, we're super pleased with the recent filing on Bonti. As we've highlighted before, the short-acting toxin will operate on two different levels for us.

First, it will stimulate the funnel. It will basically be a market stimulator because we know there are lots of considerers in the marketplace that are just worried about going to a full-strength toxin because it lasts for three to four months. The approachability of a short-acting toxin that works in about eight and a half hours and is gone in two and a half weeks makes the market much more approachable for the people in the consideration phase. We think it is going to work on the market and our share because obviously we have done studies with BOTOX after Bonti. In the combination use, Carter, it is very interesting. This is more of a pure sort of share play. When we talk to the consumers, many of the consumers are using a lot of BOTOX.

Jeff Stewart (EVP and Chief Commercial Officer)

You start saying, "Can you imagine a BOTOX that works almost immediately?" An immediate-acting BOTOX gives us the potential, and we'll have to see how those trials and those studies play out, to actually restate the whole market. What is remarkable about Bonti is that we can see a two-grade change in the glabellar lines in eight and a half hours. Nothing has ever worked even close to that fast. We could even have a premium toxin that sits alongside BOTOX one day or a replacement product for just simply a better BOTOX, an immediate-acting BOTOX. It gives us a lot of flexibility. It is certainly very exciting, as Roopal has highlighted, the program that will begin here for the combination.

Liz Shea (SVP of Investor Relations)

Thanks, Carter. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Courtney Breen from Bernstein. Please go ahead.

Courtney Breen (Senior Analyst)

Hi, all. Thanks for taking the question today. I wanted to loop back to kind of part of the inventory and tariffs conversation. We've been able to get some explicit answers from some of the peer companies. Just wanted to see if you were able to give us context as to whether you have enough inventory in the U.S. to support products like RINVOQ, BOTOX, VRAYLAR, or HUMIRA for the rest of this year and what about 2026 and 2027? The second question is just on the back of the prior Bonti question, kind of can you give us a little bit of context as to the pricing strategy for that kind of pesta market? Because arguably, kind of with a shorter-durating time horizon, you have kind of less value.

I'd love to understand a little bit more about how you're thinking about placing these products together. Thank you.

Rob Michael (Chairman and CEO)

This is Rob. I'll take your first question. Jeff will take the second. Look, absent policy details, we're not going to get into speculating on the impact. I think you've known us to be a company that once we have a full understanding, we're very transparent and detailed if you think about how we approach the Part D benefit redesign. As soon as we understood that impact, we were well in advance of the implementation of that, discussing the impact on the company. With tariffs, we don't have the policy details for the sectoral tariffs. It's premature to speculate on the impact. Once we have that information, we'll communicate at the appropriate time.

Jeff Stewart (EVP and Chief Commercial Officer)

Yeah. Regarding the pricing, obviously, since we just had the filing, it's premature. We'd go through a very rigorous pricing analysis as we would get closer to launch.

Some of the considerations that we would look for, which is obviously, as I mentioned, the rotation of even more patients into the aesthetic practices brings a lot of value to those practices. If you think about it, the lifetime value of those new patients is very meaningful. That could play into dynamics of ultimately how we price the Bonti once we ultimately make that decision sometime next year. Obviously, it does work shorter. That might imply a different or lower price point to start the trial. Those are all considerations commercially that we will go through as we go through our launch readiness process over the course of the year to really optimize the impact of that product as we bring it to the market.

Liz Shea (SVP of Investor Relations)

Thanks, Courtney. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Mohit Bansal from Wells Fargo. Please go ahead.

Mohit Bansal (Managing Director and Co-head of Therapeutics Research)

Okay. Thank you very much for taking my question. Congrats on all the progress. I would love to understand a little bit more about your thought process around Gubra's amylin. There have been a couple of strategies. Of course, Novo is trying to combine it with GLP-1. There is also a strategy or thought process that amylin could be a good agent as a standalone agent. How are you thinking about this, especially with the longer-acting version? Do you think there is a strategy to just use this as a single agent, especially among patients who cannot tolerate GLP-1? Would love to get your thoughts here. Thank you.

Roopal Thakkar (EVP of Research and Development and Chief Scientific Officer)

Hey, Mohit. It's Roopal. I'll take that. Thanks for highlighting some of the potential here. I think we're thinking about it quite broadly. As you stated, there's an opportunity here as a monotherapy. I think the way we think about it is tolerability is key. We see a number of dropouts, upwards of 30%, even after a month of starting with the current set of assets. When we look over the course of a year, 60%-70% of the patients will drop. Now, there's a variety of factors that drive that discontinuation. A key component is tolerability. To have a monotherapy that's tolerable, that provides meaningful weight loss, and potentially has other potential benefits, we've seen preclinically preservation of muscle. We'll have to see if that plays out. That could be another benefit in the long term.

Rob Michael (Chairman and CEO)

When this launches, we do anticipate many of the patients will have already been on assets that are available today. It could serve as a nice follow-on for folks that could not tolerate or came off for other reasons and want to go somewhere else. In terms of combinations, recall, when we did this deal, one thing we liked about it was also the neutral pH of the formulation. That could enable combinations with a variety of mechanisms. As Rob stated, we continue to be interested in this space and will be thinking about other potential opportunities, which could include combinations that may drive further weight loss. Key for us would be tolerability and durability of use.

Liz Shea (SVP of Investor Relations)

Thanks, Mohit. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Steve Scala from TD Cowen. Please go ahead.

Steve Scala (Senior Research Analyst)

Thank you so much. Two questions. First of all, Bristol appears to think there's a path forward with Cobenfy in adjuvant schizophrenia based on existing data. Where does AbbVie stand in its analysis of the future of Emraclidine, for instance, as a path forward become more clear in the last few months? Secondly, I believe AbbVie has more plants in Ireland than any other company. Curious how you think about that, as well as your overall OUS footprint. Do you cut back OS. to invest in the U.S.? Do you maintain the presence OUS, given the fact that in four years we could have a different administration with very different views? Related to this topic, yesterday, Roche said that their U.S. plants are 50% utilized. I'm wondering if AbbVie would share a similar percentage. Thank you.

Roopal Thakkar (EVP of Research and Development and Chief Scientific Officer)

Hey, it's Roopal. I'll start with the schizophrenia questions. In terms of the recent data, it's difficult for us to comment. I think that'll be a discussion between the company and health authorities regarding the utility of a failed study. That would be their discussion to have. How we look at Emraclidine is that we do still see potential. And we want to approach this in a stepwise manner. The first step would be to look to see if we can further dose escalate beyond what was previously studied. We saw variable PK levels in those patients from the pivotal studies. Some were low. And we think there's an opportunity to raise that. So a multiple ascending dose study will be initiated this year. And that would apply to potentially monotherapy in schizophrenia, as well as the adjunctive setting.

Jeff Stewart (EVP and Chief Commercial Officer)

As that data rolls out, and if we're able to utilize a higher dose, then we would, again, stepwise go forward into a phase two setting to further de-risk and apply our learnings in terms of trial design. If we see strong data there, which could be as a monotherapy, could be as an adjunct, and also in neurodegeneration psychosis, then we would move into the phase three setting. I would say we still believe there's opportunity here.

Steve, this is Rob. I'll take your question on the manufacturing footprint. As I mentioned in my remarks earlier, obviously, AbbVie, we have a very broad footprint. An important part of the strategy is to assure supply. As I mentioned earlier, we went through a global pandemic without any supply disruptions. That strategy certainly paid off. We also have, I'd say, a very robust manufacturing network in the U.S. I think what's been widely misunderstood is SKYRIZI, as an example, our largest product, is made in the U.S. When we look at our global footprint, we consider assurance of supply. As Scott mentioned earlier, clearly, obviously, tax has an influence on longer-term how you'd want to structure your supply chain. Certainly, I think with a more competitive tax policy, that's going to provide the appropriate incentives.

We have obviously been ramping our volume considerably. You look at just the performance, just then think about biologics capacity and just the tremendous ramps we've seen for SKYRIZI and RINVOQ. We stay ahead of the curve. We ensure that we are investing appropriately so we can keep up with that demand. I'd say the commercial team puts a lot of pressure on operations because they're performing so well. Operations stays ahead of the curve and invests appropriately. When we look at the investment, and when I mentioned the greater than $10 billion investment, that takes into account in the U.S., that takes into account our volume growth that we expect, in addition to new areas that we will invest, for example, peptide manufacturing as an example.

As we enter that space, obviously, now as we enter into obesity, it makes sense to add that capability. That will also be part of our supply chain strategy here. That is the way we are thinking about it.

Liz Shea (SVP of Investor Relations)

All right. Thanks, Steve. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Dave Risinger from Leerink Partners. Please go ahead.

David Risinger (Managing Director and Senior Research Analyst)

Thanks very much. Congrats on the performance. I have two questions, please, and they're both a bit high level. The first is the industry is facing three major U.S. government risks, actions that are harming biopharma innovation, including significant FDA disruption and questioning of proven medical science, tariff threats, and also the Trump administration's agenda to take prices down more than the Biden administration took down drug prices. Considering what appears to be a lack of appreciation in Washington of the benefits that the biopharmaceutical industry brings to Americans, can you please comment on how your executive team and board are engaging differently today with Washington leadership to change the political agenda for the better? The press release mentions that guidance does not reflect any trade policy shifts, including pharmaceutical sector tariffs.

Can you describe the potential trade policy shifts that you're considering or thinking of beyond tariffs? Thank you.

Rob Michael (Chairman and CEO)

David, I'll take the first question. Roopal, you can certainly add on as it relates to FDA. Scott, you can take the last question. We're obviously not a member of Pharma today, AbbVie, but we do continue to communicate with the association, really to seek alignment on the most critical issues for the industry. Now, AbbVie has a large government affairs organization that engages with lawmakers and the administration on our top policy priorities. That includes tax reform. We've talked about that quite a bit today, IRA, 340B, and patient affordability in Medicare. We have actually seen some positive results from that engagement. I mean, just this week, Congress released a report on 340B, which included a recommendation that changed the law to more clearly define a patient, which should help address the abuse that is occurring with this program.

I would also view the 340B policies and the latest executive order as a positive. I also previously mentioned that seeking to eliminate the pill penalty is a positive for innovation. We will continue to work with lawmakers, as we always have, on policies that support a healthy U.S. biopharma industry, continued innovation, and patient affordability.

Roopal Thakkar (EVP of Research and Development and Chief Scientific Officer)

Hi, it's Roopal regarding FDA interactions. I would say our teams have been in active discussions with the FDA on multiple programs across therapeutic areas, sometimes daily interactions, and no signals of a slowdown. We are monitoring the situation closely. However, thus far, we haven't experienced any delays to our timelines.

Scott Reents (EVP and CFO)

It's Scott, just with respect to your question on my initial comments. It's just the trade policy shift we're talking about here is the pharmaceutical sector tariff or the potential pharmaceutical sector tariffs. It's not any additional things that we were contemplating. Certainly, the environment has some uncertainty out there. Specific to that comment, we were speaking of the pharmaceutical sector tariffs.

Liz Shea (SVP of Investor Relations)

Thanks, David.

David Risinger (Managing Director and Senior Research Analyst)

Thank you.

Liz Shea (SVP of Investor Relations)

Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Vamil Divan from Guggenheim Securities. Please go ahead.

Vamil Divan (Managing Director)

All right. Thanks for taking my questions. Congrats on the quarter. I do not think you have addressed these. Sorry if I missed some of this. One of the tariff discussions, I was curious about the aesthetic side. I know that pharmaceutical products are excluded from the current tariffs. I thought products like your breast implants and JUVÉDERM may be included right now. I was curious if that is the case or not. If it is, why would there not be some accounting for that in your new guidance? Or maybe you just absorbed it within your guidance? Any impact there? Second is just on the aesthetic side, I appreciate the macro issues and all the macroeconomic pressures. I am just curious if you can comment on the market share dynamics.

Is there any sort of share shifts that you're seeing, either in toxins or fillers, that may be impacting things beyond the macro component? Thanks.

Scott Reents (EVP and CFO)

Thanks, Vamil. It's Scott, you were right. It's a great question regarding the current tariff rules that are in place. In general, pharmaceutical products and our products are exempt from those, similar to our peers. However, there was a couple of exceptions to that. Specific to aesthetics, yes, there are some application of the rules to aesthetics. We have absorbed the aesthetics impact in the guidance. I will tell you it's modest. It's something approximately $30 million. It's something fairly modest in the current rules. That's something that we have absorbed. All of the guidance that I gave and reaffirmed today from the margin profiles and otherwise includes us absorbing that.

Jeff Stewart (EVP and Chief Commercial Officer)

Yeah. Vamil. It's Jeff. I'll go over your market share, give you some flavor on that. I'll focus on our two big markets, the U.S. and China. As I mentioned, we were right on our guidance, right on our forecast for the first quarter. Remember, the biggest impact there was the price because we reversed the Ally redesign from last year. When we looked at basically what happened from the third quarter to the fourth quarter to the first quarter, we know we took a market share hit in toxins in that fourth quarter. The good news is we've seen a complete re-engagement in basically the old Ally program with all of our accounts. Things are quite stable. We actually had a one market share point gain back from where we were.

Now, we still have to gain some more share over the course of the year to come back to where we were pre the change to Ally. We have lost year over year some share in toxins. In the U.S. and filler, our share is very, very stable. We did not see a significant share impact on the filler side of the business. It's just been sort of a double-digit market pressure there. Now, in China, I'm quite pleased with the share performance. We've recently had a couple of significant approvals sequentially. We have the masseter approval for BOTOX, which is sort of in the lower face and jawline, and also Volux, which is in JUVÉDERM. We've actually seen significant positive momentum in BOTOX share in China, as well as positive share in filler. It's a little variable across the board.

Our big push will be to recover that share over the course of the year in the U.S. toxin space. Hope that helps.

Liz Shea (SVP of Investor Relations)

Thanks, Vamil. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Alexandria Hammond from Wolfe Research. Please go ahead.

Alexandria Hammond (Director and Head of Therapeutics Research)

Thanks for taking the question. Congrats on the quarter. SKYRIZI and RINVOQ have consistently surpassed expectations. We've been getting some questions on what might drive long-term growth in I&I as it relates to these assets. Could you comment on when we should start seeing results from your SKYRIZI and RINVOQ combination trials? As a follow-up, what combination are you most excited about from a mechanistic perspective? Thank you.

Roopal Thakkar (EVP of Research and Development and Chief Scientific Officer)

Hi, it's Roopal. I'll start on the SKYRIZI question and the combinations. The studies have initiated. We would anticipate next year starting to see early data readouts. I would say we're excited about several of these mechanisms. We've utilized quite a bit of data that we've already collected to see what could be the best combination. Ultimately, clinical data will guide that path. We use biopsy data. The team has applied machine learning to these data sets, spatial omics, a variety of different techniques. The ones that we like are, one, the alpha 4 beta 7 combination. We think that could be a good combination. We like lutikizumab, which is a bispecific to anti-IL-1 alpha and, importantly, IL-1 beta. We see that overexpression in patients with IBD that have failed other advanced therapies.

We see something similar for TREM1, which would be another potential combination. As I mentioned, we also have an agent designed to be longer-acting TL1A that could also be a very good fit with IL-23 like SKYRIZI. The other thing we'll be doing, since I mentioned a variety of different combinations, is also capturing a number of biomarkers to see if there's any potential for pretreatment segmentation in the future, consistent with what we do in oncology. Thus far, no real successes, I would say. Maybe there's hints in TL1A. We're going to generate that data as well to see if there's opportunities to be able to use biomarkers in the future to segment these patients.

Jeff Stewart (EVP and Chief Commercial Officer)

Maybe, Alexandria, I might add, when we look at SKYRIZI and RINVOQ, certainly, we're very pleased with the strong demand in the quarter. That led to us taking a combined $900 million of increased guidance for the year. We've also given the long-term guidance in 2027, which we continue to feel very confident in. I think it's worthwhile to think about RINVOQ as we'll have a second wave of indications towards the end of the decade that will add a couple of billion dollars of sales. We really see these two products, even before the combination that Roopal spoke about, as having a long runway for at least the next eight years. We feel very good about that from that perspective.

Rob Michael (Chairman and CEO)

This is Rob. I'll just add on to that. I think strategically, when we look at the company and we have this clear runway to growth for at least the next eight years, we can use that time. Obviously, we're looking to elevate the standard of care for immunology patients. We think these combination studies are a way to accomplish that. We're going to use that time to, just as we did with HUMIRA, we came up with SKYRIZI and RINVOQ as a way to elevate the standard of care. That was the second that really launched into a second chapter of the company. The third chapter is going to be, as we think about the growth beyond SKYRIZI and RINVOQ. We have the time, and we're investing appropriately to identify what those drivers will be within immunology and outside of it.

I mean, we have five key growth areas that we're very confident can drive growth. Obviously, you've now seen us enter the obesity space as we think about more sources of growth. We think that's also an opportunity. We think the company is very well positioned to grow very nicely for at least the next eight years and then use that time and the investment that's available to grow beyond that.

Liz Shea (SVP of Investor Relations)

Thanks, Alexandria. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of James Shin from Deutsche Bank. Please go ahead.

James Shin (Director of Biopharma Equity Research)

Hey, guys. Good morning. Thank you for the question. I had a question on current immunology price volume dynamics. Specifically, is the low single-digit headwind being realized? If so, is it somehow being blended where HUMIRA is seeing outsized headwinds while Sky and RINVOQ are seeing tailwinds? Or is there some sort of copay shift? Or is there a shift in copay utilization year over year or sequentially? Thank you.

Scott Reents (EVP and CFO)

James, it's Scott, I think I'll start with SKYRIZI and RINVOQ. If you look at the first quarter, those were both driven by strong demand. Now, we've talked about pricing being slightly negative for those two products on a full-year basis. We did see a little bit of favorable price in the quarter. That's just a gating issue. In the quarter, probably two things. One, Jeff's organization continues to do a very good job of focusing on copay utilization and effectively managing that. We saw a little bit of benefit from copay utilization. In addition, we had anticipated some channel mix changes later in the year. Those actually came to fruition a little bit earlier than we thought. Those factors, I would say, along with some other gating issues, combined to being price favorability.

We still anticipate negative pricing headwinds on a full-year basis. With respect to HUMIRA, we talked about in the quarter and on the full year that there's a decrease in volume associated with share erosion as well as the compression of the overall molecule. That volume is going to continue. I think you'll see that volume a little bit more pronounced throughout the year. There certainly continues to be some price. You've got some unwinds of accruals that cause price impacts. You also have just the changing of the rebating dynamics as we entered into a new contract year.

Liz Shea (SVP of Investor Relations)

Thanks, James. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Geoff Meacham from Citibank. Please go ahead.

Geoff Meacham (Managing Director)

Hey, guys. Thanks for the question. Rob had another one on policy. Wanted to get your perspective on PBM reform, which is often mentioned as highly likely to happen this year. What would you say are the main elements that you'd want to see in reform? The second one on TV, is there a therapeutic area that you guys feel like you still have to add to? I wasn't sure if neuro remains one of the top priorities, just post-emraclidine. It does seem like multiple shots on goal and metabolic disease is kind of the approach a lot of other biopharmers are taking. I wanted to get your perspective. Thank you.

Jeff Stewart (EVP and Chief Commercial Officer)

Jeff, I'll take those questions. On PBM reform, I think we're supportive of anything that helps with patient affordability. To the extent that that improves the dynamic on patient affordability, that is truly realized in their pockets, that's favorable. We are supportive of the efforts there. It's really all about making sure that we're addressing patient affordability. As it relates to business development, we obviously really like the five key growth areas that we have today. As I mentioned, those will certainly drive very strong growth for at least the next eight years. I think sometimes there's a misconception about neuroscience for AbbVie. It's more than just psychiatry. We have a very strong migraine franchise that's performing exceptionally well. In Parkinson's, we're seeing great results. We've been in Parkinson's for a long time with Duopa.

As you think about the ramps we're seeing with VYALEV, that innovation we've brought for those patients, and then Tavapadon, which came from Cerevel, we could really start to see our Parkinson's franchise emerge. When I think about neuroscience, I would think about it really in four segments. There's psychiatry. It's an important segment. There's migraine. There's Parkinson's. And there's all other neurodegeneration. We obviously are investing in Alzheimer's. If you just look at the business development activity since the beginning of last year in neuroscience, we extended our discovery collaboration in psychiatry with Gedeon Richter, who discovered VRAYLAR. We added a novel mechanism for mood disorders with Gilgamesh. We acquired a next-generation A beta antibody that's very promising for Alzheimer's from Aliada. We're also investing in novel approaches for migraine disease. We are actively investing in neuroscience.

We obviously added obesity because we do think of ourselves as being a company that's going to be very large in the next decade. It doesn't hurt to have another source of growth. We have evaluated various options beyond the five. We chose to move into obesity for a number of reasons. It's obviously an extremely attractive market. It has high prevalence and plenty of headroom for growth. It's a market that has ample space for multiple players and new entrants. I think we're also uniquely positioned with our aesthetics business to access that channel in addition to therapeutics. Importantly, and it's something we always focus on, is where are there high areas of unmet need? As we think about our portfolio, that's really our strategy is to drive a remarkable impact for our patients by elevating standard of care.

When we look at obesity, there's plenty of opportunity, whether it's reducing GI side effects, improving body composition, more consistent weight loss across patient types, longer-lasting weight loss. As we evaluate that opportunity, we found the amylin class to be very attractive, given it's the most validated non-GLP-1 mechanism for obesity and has very encouraging early data. We believe the amylin opportunity with Gubra has the potential to deliver a differentiated asset. We will continue investing in obesity. We'll continue investing in our five key growth areas. We think that gives us the right mix to drive growth for long term.

Liz Shea (SVP of Investor Relations)

Thanks, Jeff. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Tim Anderson from Bank of America. Please go ahead.

Tim Anderson (Managing Director and Senior Equity Research Analyst)

Thank you. I have a question on drug advertising. AbbVie is the number one spender on this. It's hard to turn on a TV without seeing something like a SKYRIZI ad. That says you see a very positive ROI from that level of spending. As you know, there's been occasional talk by the administration about limiting such advertising. My question is, do you think there's any basis in reality for that? I know you'll say it shouldn't happen, but that doesn't mean that it won't potentially happen. On obesity, as you noted, your amylin is long-acting. Doesn't that imply that a really kind of key next part of the portfolio is a long-acting GLP-1? Or are you not interested in the GLP-1 space at all?

Jeff Stewart (EVP and Chief Commercial Officer)

Yeah. Thanks, Tim. It's Jeff. You're right. It's difficult to know if DTC reform would take place or what it might look like. I think you're right. We're very supportive of the First Amendment rights to be able to advertise. Obviously, we work with the FDA on every single claim that we make on television. I mean, if there were to be a change, we would be able to pivot. I mean, we could shift our investment to disease awareness. That could help us drive because we have such leading in-play share to continue to basically invest in the right way to consumers. We certainly could move to other channels because it's not really clear if it would just be mass media or etc. Certainly, the whole market would take a step back if that were to happen.

Our brands would still be very, very competitive in terms of our ability to pivot and toggle were that to happen. Difficult to predict. We would be, of course, planning for any of those contingencies were they to take place.

Roopal Thakkar (EVP of Research and Development and Chief Scientific Officer)

Tim, it's Roopal regarding different mechanisms. As stated previously, we think there's opportunity as a monotherapy and also as a potential combination. I would say we haven't ruled out any particular mechanism that we would combine with. The other thing to mention, I think I already stated this, but we do have a neutral pH in the current formulation for 295. That potentially makes it more amenable to combinations. Mechanisms that you mentioned and potentially others, I would say, are on the table for us.

Liz Shea (SVP of Investor Relations)

Thanks, Tim. Operator, next question, please.

Operator (participant)

Next, we'll go to the line of Trang Nguyen from UBS. Please go ahead.

Trang Nguyen (Associate Director and Equity Research Analyst)

Great. Thanks. I've got two questions if I can. First, just very quickly, you did touch on the pricing dynamics with SKYRIZI and RINVOQ. Did the strong performance include any notable one-time contributions, inventory build, or pull-forward effects? Second, similar to Vamil's aesthetics question, China reciprocal tariffs have been enacted. Is that contemplated in your guide? Is that material to your aesthetics business? I know it's early days, but are you seeing any shifts in demand there? Thank you.

Scott Reents (EVP and CFO)

Trang, it's Scott, I'll answer your questions. Thanks for the questions. With respect to SKYRIZI and RINVOQ, I would say the one item that I would point to, again, this was strong demand overall. The one thing that also helped the growth in the quarter was with respect to the retailer destocking. In the past, we've talked about there's some retail inventory buildup as a form of price speculation in the fourth quarter. I talked about in the fourth quarter call that we didn't see a lot of that. That was, again, confirmed. We did not see there was no unwind like there has been in prior years. There was a year-over-year benefit from the lack of destocking from the retail buildup in the first quarter. Again, that was fairly modest.

Jeff Stewart (EVP and Chief Commercial Officer)

When we talk about our overall growth, globally 72% operationally, the demand was really in the 60s. You just saw a small portion from that retail destocking. With respect to the China tariff, yes, you're right. There is some impact for aesthetics in those products and those numbers. That impact is fairly modest. We've contemplated that in our guidance. I would say overall, in the existing tariffs, you're talking about $30 million approximately globally. A decent component of that is with respect to the aesthetics business. Maybe, I don't know if Jeff would like to comment on, I think you had asked if we've seen any demand changes in China.

No, we haven't over the last 30 days. I mean, obviously, things change quickly. As I mentioned, if we look at the quarter, we've been encouraged by the share growth we've seen in China based on the recent approvals for both the toxin and the filler category.

Liz Shea (SVP of Investor Relations)

Thanks, Trang. Operator, we have time for one final question.

Operator (participant)

For our final question, we'll go to the line of Evan Seigerman from BMO Capital Markets. Please go ahead.

Conor MacKay (Equity Research Associate)

Hi there. This is Connor McKay on for Evan. Thanks for taking our question. Congrats on a great quarter. VYALEV and ELAHERE were two products that, outside of your I&I business, came in sort of meaningfully ahead of analyst expectations. Can you maybe walk us through what's driving the strength for each of those? Thank you.

Jeff Stewart (EVP and Chief Commercial Officer)

Yeah. Maybe I'll start on your question. Thank you for that. Certainly, as I mentioned in the prepared remark and Rob as well, VYALEV is emerging as a very, very important product. We communicated certainly that it could continue to exceed expectations. It's quite remarkable. We continue to see strong uptake in Japan, across Europe. While we're only in the commercial market, which is about 30% of the market in the U.S. because we're still waiting on the full Medicare reimbursement, the market feedback is exceptional. I mean, this is a really amazing product to help patients sleep through the night, control the movement disorders. It's unlike Duopa. It lasts for 24 hours. It's a more simple subcu injection versus a surgery that you might get. It's playing out exactly as we had hoped.

You're just seeing some strength of that in the quarter. That's also why we remarked that we're excited to bring Tavapadon, which is also showing some very nice data here. We're getting ready for the file to start to really build out a more meaningful Parkinson's category. ELAHERE, we continue to see nice uptake, very unique product. Obviously, it's got a 30% improvement in overall survival. It's well tolerated, non-chemo. The U.S. business continues to perform very well. We are starting to see the international launches. We've pulled forward significant international launches from the time that we had done the deal with ImmunoGen. We're going to start to see those international launches ramp here over the next several quarters. That gives some sense over that brand as well.

Rob Michael (Chairman and CEO)

Conor, this is Rob. I'm glad you asked a question about ELAHERE because oncology doesn't get enough attention for the company. ELAHERE came to us through the ImmunoGen acquisition. It was a very successful acquisition. It basically combined their ADC capabilities with ours. Now you're starting to see the AbbVie internally discovered ADCs emerge. We've talked about telisotuzumab Vedotin. We're very excited about Temab-706. You think about long-term growth drivers for AbbVie, oncology with that emerging pipeline. Roopal and I both mentioned 383, the bispecific for multiple myeloma. We have, I think, a very exciting emerging oncology pipeline that could be an important growth driver for the company. I appreciate the specific question about ELAHERE.

Liz Shea (SVP of Investor Relations)

Thanks, Colin. That concludes today's conference call. If you'd like to listen to a replay of the call, please visit our website at investors.abbvie.com. Thanks again for joining us.

Operator (participant)

Thank you all for joining the AbbVie First Quarter 2025 Earnings Conference Call. That concludes today's conference. Please disconnect at this time. We hope you have a wonderful rest of your day.