Moody's Ratings has upgraded AbbVie Inc.'s long-term senior credit rating to A2 from A3, reflecting the company's strong commercial performance across its core therapeutic areas. The rating agency also upgraded AbbVie's senior unsecured notes to A2 from A3 and moved the senior unsecured commercial paper rating to Prime-1 from Prime-2. At the same time, Moody's adjusted the company's outlook to stable from positive.
In its assessment, Moody's emphasized that AbbVie has sustained earnings growth that outpaces peers even while managing a steep patent cliff related to its legacy product Humira. The agency anticipates that the immunology portfolio will remain the principal engine of future growth, driven by Skyrizi's high efficacy profile and opportunities to extend indications and patient populations for Rinvoq.
Moody's also sees AbbVie's neuroscience franchise contributing to an improved business profile, noting newer products such as Vyalev, intended for Parkinson's disease, and Ubrelvy, targeted at migraine treatment, as material growth drivers.
On the cash-flow front, Moody's projects that AbbVie will generate free cash flow in excess of $10 billion annually after dividend payments over the coming two to three years. That level of internal cash generation is expected to provide the company with flexibility to pursue business development opportunities and to fund acquisitions from internal cash flows, while remaining prepared to occasionally use incremental debt to finance certain deals.
The A2 rating reflects several strengths including AbbVie's large global scale and strong competitive positions across immunology, oncology, neuroscience and aesthetics. Those strengths are counterbalanced by the firm's relatively high therapeutic concentration in immunology, especially around key franchises Skyrizi and Rinvoq, which face substantial competitive pressures.
Moody's additionally noted that AbbVie has greater exposure to U.S. drug pricing policies than some peers, given that a majority of the company's revenue is derived from the United States. This geographic concentration in revenue was highlighted as a factor that influences the company's credit profile.
Moody's identified specific metrics and developments that could affect the rating over time. Factors that could support a future upgrade include demonstrable increases in product and therapeutic diversity, sustained strong growth in core products, successful execution of the pipeline, and maintaining debt-to-EBITDA below 2.5 times.
By contrast, the agency warned that a downgrade could occur if AbbVie were to experience unexpected pressures across key franchises, significant pipeline setbacks, or pursue large, debt-financed acquisitions that result in a sustained debt-to-EBITDA ratio above 3.25 times.
Bottom line - Moody's move to A2 with a stable outlook underscores confidence in AbbVie's near-term commercial execution and cash generation while acknowledging concentration risks in immunology and exposure to U.S. pricing dynamics.