AbbVie Anticipates $2.7B R&D Hit, Adjusts Full-Year Profit Outlook

In a significant development for the pharmaceutical industry, AbbVie has announced an expected $2.7 billion impact on its third-quarter financials, prompting a revision of its full-year earnings forecast. This substantial hit is attributed to acquired in-process research and development (IPR&D) expenses and milestone payments, reflecting the company's ongoing investment in future therapies and collaborations.

Financial Implications and Revised Guidance

AbbVie has adjusted its full-year earnings per share (EPS) guidance, reducing both ends of the forecast range by $1.50. The new EPS projection now stands at $10.38 to $10.58, down from the previous estimate. This adjustment comes as a direct result of the anticipated $2.7 billion in expenses, which the company disclosed after market close on Friday.

The magnitude of this financial impact is noteworthy, especially when compared to AbbVie's expenses in the first half of 2025. During that period, the company recorded just over $1 billion in similar expenses, with $951 million attributed to upfront charges and the remainder to milestone payments. The significant increase in the third quarter suggests a period of intensified research and development activity or major deal-making.

Strategic Investments and Collaborations

While specific details of the deals driving the $2.7 billion expense are not yet available, AbbVie's recent activities provide some context. The company recently entered into an agreement with Ichnos Glenmark Innovation, committing to a $700 million upfront payment for an exclusive license to a trispecific antibody targeting CD38, BCMA, and CD3. This deal, which had not closed by the time of the second-quarter results, may contribute to the reported expenses.

AbbVie's approach to forecasting these expenses reflects the unpredictable nature of pharmaceutical R&D and deal-making. The company typically does not include acquired IPR&D and milestone expenses in its initial forecasts due to the uncertainty surrounding the timing of payments. This practice, while providing flexibility, can lead to significant adjustments to financial guidance as seen in this instance.