After splitting from Abbott Laboratories in January 2013, AbbVie’s future looked cloudy (ABBV: NYSE).
Half of the pharmaceutical company’s revenues were from a single drug whose patents would soon expire.
CEO Richard Gonzalez has lifted the company onto a higher level of growth. He built a strong company culture and made strategic acquisitions that are worth looking at.
Richard Gonzalez was a 30-year veteran at Abbott before he became CEO of AbbVie. He had worked across several business areas, including commercial, R&D, and manufacturing.
In 2007, he retired after contracting throat cancer. There was also a mini-controversy over his CV.
But cancer could not keep him down. He came back in 2009 as Executive Vice President and became CEO of AbbVie (Abbott Ventures) when it split off from Abbott in 2013.
Being the CEO at the start, Richard Gonzalez could take AbbVie in any direction. So what do you think he did?
He decided to make culture a key strategy. He wanted a happy workforce that collaborated together and focused on innovation.
He knew that innovation was the key to AbbVie’s future and that people were the key to innovation.
“Ultimately, we want everyone to feel like AbbVie is a place where they belong, do great, and can grow their career.”
To build the culture, he put into place a whole range of initiatives beyond what most companies do. AbbVie looks more Silicon Valley than East Coast pharma!
AbbVie is based in North Chicago and has child care on-site. Work hours are flexible with job sharing and strong support for parents with children.
There is even a 24/7 concierge service that can help plan a party or help you buy a house.
Staff has the opportunity to grow with the “Learn Develop Perform” training platform.
There is also an internal radio, podcasts, interest groups, and a social media platform only for staff.
Every two years, the staff receives a company-wide survey to voice their opinions. Managers are subject to 360-degree feedback.
Staff can recognize high achieving peers through a peer recognition program.
There is even a formal phased retirement program where older staffs can help determine how to transition to retirement.
Richard Gonzalez’s initiatives have worked. AbbVie has a 96 percent retention rate, 88 percent of staff say they care about each other.
In 2019, AbbVie was #16 in the world’s best workplaces.
The results can also be seen in the company’s innovation.
Its top-selling drug, Humira, is facing strong competition from copies. Its EU patent expired in 2018, and its US patent expires in 2023.
But the company has developed a range of new drugs that could replace Humira’s declining revenues – $19bn in 2019.
AbbVie products, Skyrizi (psoriasis) and Rinvoq (rheumatoid) launched in the last few years. They have already grabbed some in-play market share.
They cover all the treatment areas of Humira with the potential of some lucrative new treatment areas. Together, AbbVie believes that the two drugs can bring in $20bn a year. Nice!
Richard Gonzalez has also made some key strategic acquisitions, most notably Allergan, in 2019 for $63bn. AbbVie finalized the deal this year.
Allergan owns the drug botox (ever heard of that?) and several drugs that sit well in the AbbVie portfolio. It is expected to provide strong revenue now and in the future.
Since splitting off from Abbott, AbbVie’s revenue has increased by 77 percent. Not bad!
They have also looked after shareholders by paying a rising dividend each year. Its current dividend yield is 5.3 percent.