AbbVie Inc. (NYSE:ABBV) 4th Annual Wolfe Research Healthcare Conference November 15, 2022 11:30 AM ET
Company Participants
Rob Michael – Vice Chairman & President
Jeff Stewart – Executive Vice President & Chief Commercial Officer
Neil Gallagher – Vice President, Development & Chief Medical Officer
Liz Shea – Investor Relations
Conference Call Participants
Tim Anderson – Wolfe Research
Tim Anderson
…Fourth Annual Healthcare Conference this week. We’re doing a few virtual meetings today for those companies that couldn’t make it, we’d the same on Friday. And on Wednesday and Thursday of this week, we’ll have the live conference itself and a smattering of companies from my coverage as well as Justin Lake and Mike Bullard.
So we’re happy right now to have AbbVie with us, various members of the management team, including Rob Michael, and Jeff Stewart and Scott Reents and Neil Gallagher, as well as Liz Shea from Investor Relations, and it’s going to be a fireside chat discussion.
Question-and-Answer Session
Q – Tim Anderson
And with that, we’re going to go ahead and just jump right in. We’ve got a lot of content to cover. So welcome, everyone. Maybe high-level questions first. We’ll get to Humira. That will be a source of many questions. But out at the merit, can you just talk about the pushes and pulls that you see in 2023 unrelated to Humira?
Rob Michael
Sure. Thanks. It’s very nice to be with you today. I’d say, outside of Humira, obviously, we’ll talk about quite a bit. I mean, clearly, in terms of pushes and pulls, I highlight three areas. One, if you think about all the new indication share ramps we have for Skyrizi and Rinvoq and the continued growth in their lead indications, we’re essentially going to have six indications in Rinvoq, three in Skyrizi on the market and so the continued growth that those share ramps are critical and something we’ll keep an eye on.
And then, you think about the new approval end of 2023 for Rinvoq in Crohn’s, that will actually add to the portfolio. When you think about the impact of inflation and potential recession, really, it’s focused on the aesthetics business. It makes up less than 10% of our revenue footprint, but clearly, as you think about pushes and pulls, monitoring the impact of inflation and a potential recession.
And then, I’d say, we have a number of approvals across the rest of the portfolio. I think about the potential approval for Vraylar and AMD, epcoritamab and third-line DLBCL, Venclexta in third-line multiple myeloma and t(11;14) population. We have ABBV-951 in Advanced Parkinson’s Disease and then Qulipta in chronic migraine.
So quite a bit happening on the business front, things we’re very excited about. But I’d say those are the key things, you think about pushes and pulls. We’ll, obviously, provide more detailed guidance on the Q4 call. But those are the things I’d point you to outside of Humira.
Tim Anderson
Can we talk about drug pricing for a minute, not really the price negotiation part of the IRA, but the inflation caps that come into effect earlier starting next year. And there’s been a perception among analysts and investors that, that’s probably not terribly material, because the industry has already started to self-limit on price increases. So would you agree that that’s the case, or do you think it will have some dampening of effect.
Rob Michael
No, that’s true for us as well. I’d say, the impact is negligible. As you know, we count on volume for our growth on price — and so, as we’ve modeled the potential impact here in 2023, 2024, which is really what the IRA is limited to in 2022, 2024 is, as you mentioned, the inflation penalties, it will be a negligible impact to the company.
When we think about things like Part D redesign, which gets in 2025 and the negotiation, which is 2026 and beyond, there will be the sequencing of the impact of IRA. But as of later, inflation penalties, I would expect essentially a negligible impact.
Tim Anderson
Ex US pricing in the past, I mean, if you go back to the 2008 time frame, remember, a few years that followed, there were various countries that took austerity measures enforced through price cuts. And so, it was repeating on kind of a global recession, if we continue to head in that direction, do you think that’s something that could possibly resurface? It resurface back then, why couldn’t it resurface again?
Rob Michael
Well, I’ll start with Venclexta cost. I actually — since we talked about this actually during the height of the pandemic with pressures on those countries, the fiscal pressure that we would expect to see some level of austerity. We’ve seen in some pockets that develop. Again keep in mind for our portfolio given the high US concentration where we’ve seen that impact it’s been manageable.
But we are starting to see it creep up in various markets particularly in Europe not surprising. I mean we typically see over time in those international markets price decline low single to mid single-digits. So it’s still operating in that range. It’s not moving us off any expectations. But I’d say clearly there has been a move towards more austerity in certain pockets. And I would expect that to continue given the overall economic situation.
Tim Anderson
Yes, you brought up in that immediate post-COVID environment. There were actually several companies talking about like the steroid measures and it seemed like it was actually minimal and I was surprised some maybe that’s something to be hopeful for here.
Rob Michael
It took — it certainly did not kick in as quickly as we thought it would. Certainly at that time, we thought it would kick in sooner, but we are starting to see a pickup in certain markets.
Tim Anderson
Yes.
Rob Michael
…but very manageable for us.
Tim Anderson
Yes. Okay. Inflationary pressures how most companies that I track seem to have not flag that as a major headwind have commonly talked about finding offsets of various sorts to inflation. ABbVie feel the same way? And what are those types of offsets and levers that you can pull?
Rob Michael
Yes. I would couple inflation and foreign exchange. There was a relationship there. And you think about for our business if I think about both of those on the top-line the stronger dollar has caused us to take down our sales guidance versus the original guidance we gave on the Q4 call by a cumulative $600 million. So that’s the way to think about it for AbbVie.
Now we have cash flow hedges in place to protect the current year margin. So we haven’t seen that impact the bottom line. I’m not sure how you model 2023, but it’s something to keep in mind that if you haven’t factored in the stronger dollar obviously would need to factor that into 2023 expectations given the flow-through from 2022, but also as it relates to margin we protect the current year so we avoid the earnings volatility, but that doesn’t carry over to the following year.
So as you think about FX there would be a flow-through of FX pressure into the following fiscal year. As it relates to inflation, we have factored in — obviously we have seen higher inflation this year. We always look for productivity to offset that inflation. So we’ve been managing it. There’s also on the expense lines the benefit of a stronger dollar obviously, reduces your expense lines you have international exposure.
And so for AbbVie this year I would characterize it as higher inflation has been offset by productivity and the stronger dollar. And so you haven’t seen that necessarily come through on the expense lines. But from a margin perspective while we protected this year clearly the stronger dollar has an effect in the following year.
Tim Anderson
Great. On business development when big companies lose big products oftentimes that leads to big M&A. And I think even you look at AbbVie’s history. So as Humira was going away I mean you guys bought Allergan. So my question is where to from here can you say that you won’t engage in the larger transactions? I would define that as maybe $30 billion or higher or something like that.
Rob Michael
We feel we’re very well-positioned with the five key therapeutic areas that can drive long-term growth that we’ve said will deliver high single-digit growth in the second half of this decade which would be industry-leading. We’ll also have the lowest LOE exposure in the industry after 2023. And so we feel like we have the portfolio. We don’t need to do — we don’t need to do something on the M&A front.
That said, given the rapid paydown of debt we’ll have leverage below two times. It will be 1.8 times at the end of this year $30 billion of cumulative reduction. We have $4 billion of maturities next year that we plan on paying off. They will essentially have paid off all the incremental financing from the Allergan transaction.
So we will be in a position where as we look at the universe, there’s an interesting opportunity. We’ll have the financial flexibility and the firepower to be able to do that. That said, we don’t feel like we need to do something.
So we have an active BD group that looks — always looks for opportunities. But given the portfolio we have today, the pipeline and the prospects of the business, we’re certainly — we won’t be doing it out of a need to do something. It will be more — if there’s an interesting opportunity we have the flexibility.
Tim Anderson
Okay. Before I jump into some Humira-specific topics. Looking forward in the next, let’s say, six to 12 months what are some of the most important catalysts ahead for you guys that could be a pipeline product, it could be something on the commercial front. I’ll let you answer that in terms of how you see it looking for positive catalysts essentially.
Rob Michael
Yes, of course. And I’ll cover some of the commercial approvals and I have Neil talk about on the pipeline front. But clearly, we’re expecting a decision here soon for Vraylar to jump to MDD. That’s really an interesting opportunity, we’ve said, Vraylar, we expect approach $4 billion peak revenue if it’s currently food indication. So that additional indication would represent upside versus our long-term expectations, epcoritamab and third-line DLBCL, as we think about the oncology franchise and the future growth drivers, epco, the expansion for VENCLEXTA in third-line plus myeloma.
I mentioned 951, as I talked about pushes a pulse. I mean, those are all very interesting catalysts for the company over the long-term. If you think about QULIPTA and the opportunity in chronic migraine and really rounding out that the migraine portfolio. And then for us continue to drive the expansion for immunology and Rinvoq and Skyrizi, and we have very nice early feedback on the gastro indications really across all the indications, but really we’re seeing very nice growth there.
So I’d say that would be another key catalyst as you look at the opportunity for Rinvoq and Skyrizi to essentially replace Humira over the long-term. We’ve said they’ll exceed the peak revenue of Humira. And so that’s I think an important change for the company to see that next step in terms of growth trajectory for Rinvoq and Skyrizi. And Neil, do you want to cover the pipeline?
Neil Gallagher
Yes, sure. I mean, just building on what Rob said, I want to repeat what he said, but building on the credit approval that we’re expecting will be filed and we’ll anticipating an approval during 2023. We’ve already initiated the Phase 3 study in relapsed/refractory DLBCL and we’re currently finding a number of other Phase 3 studies to pretty aggressively expand the indications for promo.
951, Rob mentioned, so maybe just sticking on oncology for. Obviously, we’re expecting the navitoclax for myelofibrosis coming in 2024. And as well as that maybe just turning to the solid tumor oncology portfolio. So as you know we’re pretty excited about Teliso-V. We’ve got BTD for c-Met high non-small cell EGFR wild type patients earlier in the year. So we’re anticipating data from the ongoing pivotal study during 2023 with potential approval during 2024.
In addition to the relapsed refraction on small cell population, so let’s just talk about the c-Met population. As we’ve talked about before the c-Met intermediate and high population comprises around 30% of that non-screen, non-small cell EGFR wild-type population. So that’s pretty significant. That’s however, the exact numbers, but it’s like 35,000 patients annually in the United States looking at patients treated. So it’s a very significant unmet need.
We’re also planning to expand or to conduct further exploratory studies with Teliso-V for instance in c-Met amplified patients. And we also for instance reported out some data earlier in the year looking at patients with EGFR-mutated disease who stopped responding to osimertinib. And then we can look at an experiment where we added Teliso-V to osimertinib in those patients and restored response, which is actually biologically very plausible right because c-Met considered to be a pretty strong evidence at c-Met escape mechanism.
Importantly, just sticking with c-Met. We also have another molecule called ABBV-400 which is another c-Met antibody ADC same antibody, same linker, but the warhead has took on. And we’re currently advancing that molecule in early phase development. We’ve seen some very intriguing data in colorectal. And therefore, we’re viewing both of these molecules in the franchise moving forward. So we believe that gives us a very interesting opportunity, not only to enter the market — solid tumor space by 2024, but also to expand more broadly not only in non-small cell, but potentially in GI tumors and elsewhere.
We also have some very intriguing data early phase data in from the immuno-oncology portfolio. We recently reported data from 151 at SITC particularly intriguing in urothelial carcinoma as well as hepatocellular carcinoma. And we’re expecting additional data from other immuno-oncology assets later in the year CD39 that we have under option and other programs such as the PTPN2 inhibitors that we’re developing in collaboration with Calico are advancing well. I could go on but maybe I should just pause.
Tim Anderson
Yeah. While we’re — while you’re speaking, maybe we can just touch briefly on ABBV-154. So this was a program that you guys said you will not advance in RA after doing some other studies. It is still in studies for I think two other indications cobble concept. No other companies or very few companies pursuing a product like this in a non-oncology setting. But knowing what you now know is the RA setting, my guess is that the overall risk profile of this in any setting may be lower before you had that data? Is that a fair assessment?
Neil Gallagher
I think it will be fair to say that our overall assessment will be more — will be slightly different had we not observed what we observed in RA. But let’s talk about what we did observe from a positive perspective. And we saw activity in the RA study that was as good as or slightly better than RINVOQ overall in that population. But the original hypothesis was that we would develop the molecule — so just to pass for folks who aren’t familiar with the molecule. So it’s an ADC with adalinumab as the binder with the linker linked to highly potent steroid warhead, okay? So the hypothesis when we started out on the development journey with the molecule was that we could target TNF receptor expressing cells have the complex internalized, thereby releasing the steroid warhead internally and avoid steroid stood side effects. So that was the thesis going to the program.
What we observed was the activity was very good, right? As I alluded to it was at least as good as sometimes looking better, with all the caveats across cost comparison better than historical Rinvoq data in RA, but we did see evidence of some systemic steroid side effects. And therefore, it couldn’t really fulfill the full expectations in that regard.
Now, we also as you alluded to, we have the molecule under investigation in two other indications one in PMR, one is in PMR and the other in Crohn’s disease. Really, we’re expecting the PMR data in the first half of next year. It’s important to note that, PMR is an exclusively sensitive to corticosteroids. And therefore, we believe that although, we saw a systemic steroid side effects in the RA study, we also believe that, there’s evidence from that study that there was a degree of steroid sparing in that population. So we’re waiting to expect to keep for the PMR data in the first half of next year, and then we’ll be able to evaluate the overall program further.
Tim Anderson
Great. Okay. Let’s move to Humira, if we can. So AbbVie provided an update in Q3 on how to think about erosion, or I should say some level of update. It ended up being less detailed than I think we had thought it would be and at the best consensus as well. And part of that, I think was driven by the fact that discussions are still ongoing with payers. You need more of that information before you more precise guidance. So is that kind of a correct interpretation of those discussions? Maybe if you roll the clock back three or four months ago, you thought they would have concluded. And in fact we didn’t conclude in time which is why we didn’t get that much of an update in Q3?
Jeff Stewart
Yeah, let me – it’s Jeff. I’ll take that as that, I don’t believe that, we said we were going to give concrete guidance on the 45 plus or minus 10, but we would give understanding of where we were with the negotiations. And I think that’s what we did on the call. So I would say that, they are longer more strenuous negotiations than normal.
And typically, as you know, Tim in the – in the Tim’s category they’re pretty tough every year, right? So the stakes are high, in terms of how the payers are going to think about how they structure their formularies, what the level of intensity is. And so typically, what we see is that our negotiations kind of start in the late spring and their intense all over the summer and they start to really conclude in the October time frame.
So, they are slightly behind in terms of the annual process that we typically see. I think it’s – again, it’s important that when we gave our projections. So, this a strong confidence level, okay, because you can have everything from like very strong confidence, open discussions, or signed contracts, we gave that guidance that we’re going to be at least at 80% availability across all of the lives, and that we think that that’s going to improve as we go through the fourth quarter towards maybe 90%.
So that gives you some sense over – we’re really accomplishing our objectives. So we’re very confident. We can see that, we’re executing against our strategy, which is we want to maintain Humira’s availability. It will in many cases or in most cases probably co-exist with biosimilars, as they stage in over the year, and we will concede price to make sure that we have that ongoing access.
So, they’re not fully closed. I mean, we have the majority in terms of our projections in a pretty good spot, but it’s reasonable to say that they’re not all closed because we’re not at the end game yet.
Tim Anderson
So, that initial goal of at least 80% that could even move higher is a strong number. My question is, what additional access restrictions would likely be good in place, that don’t exist today. So, when companies’ say we’re covered, if you’re covered in Tier 2, no restrictions that’s one thing, if you’re covered in Tier 5 that’s something else altogether. So while you might broad coverage, will you have a lot more access restrictions?
Jeff Stewart
Yes. It’s a good point. So to clarify that, when we say access, we are assuming that this is preferred or preferred access. So for example, it would not include as we talk about that projected 80%, like well, we’re available second line after a step through a preferred biosimilar. So in this case, you should think about it as, we’re communicating strong access for Humira, parity access, where physicians would have the choice to continue to prescribe Humira for new patients, certainly continue for existing patients. And they would also have the option to think about one or more biosimilars perhaps over the course of ’23. So, as we communicated the group and you should think about it that this is strong access for Humira.
Tim Anderson
And so, I just want to make sure, I hear it right. So you’re saying, you think branded Humira and biosimilar will actually have parity placement on most formulary?
Jeff Stewart
That’s correct.
Rob Michael
That’s right.
Tim Anderson
That seems really unusual to me because, if you’re like who would ever use patesimilar, formulary is partly there to encourage the patient to use one product over the other. So having parity placement to me would seem like, it would face almost no erosion whatsoever.
Jeff Stewart
Well, we have studied — and thanks for your question. We’ve studied this in significant detail. And we do see — now, many of the biosimilars as you know are they’re Part D or a Part B, excuse me or they’re different, because this is going to be a new — this is the first time you have a really large pharmacy benefit drug go biosimilar. But certainly, we are not planning as we coexist to retain 100% of the — we can see erosion curves and we can study those erosion curves in Part D plans, commercial plans. And so, there are physicians that will choose not to maintain patients on Humira for example.
Tim Anderson
Yes. Yes. Got you. Okay. And then obviously, you can make price — to get parity placement, it’s all about price. And that would very conceivably include concessions not only on Humira, but concessions and other INI products or elsewhere throughout the portfolio. That’s probably a pretty obvious statement more than a question, correct?
Jeff Stewart
Yes. For sure. I mean, as we said the primary strategy which we’re executing is, we will concede price to maintain that parity access. And so as we see things finalized and shake out over the next, probably several weeks, I mean eventually we’re going to run out of time and the formularies would need to be fully set, that’s why we’re going to be able to see in total the full market scope of that price and volume that’s going to aid a much more, let’s say clear cut guidance as we go into the fourth quarter call in terms of how Rob and the team will look at that.
Rob Michael
But I wouldn’t assume — I mean it’s really focused on Humira. There’s always other puts and takes across the portfolio, which are their unique circumstances. But we’re having those discussions. We’re thinking about the overall portfolio. But, I wouldn’t think of it as an outsized. There’s natural you’d see rebates increasing as these brands — some of these brands get larger, there’s a natural increase of rebates over time that you naturally would see. So I wouldn’t necessarily draw too close of a distinction of you’re going to be leveraging the whole portfolio and therefore, that’s how you’re gaining your position — your parity position on Humira.
Tim Anderson
How fluid over contracting be throughout the course of 2023? Because we’re obviously only starting with one biosimilar for the first half and then we get a flow of biosimilar in the middle. And we can’t know the price of those products coming in at the middle. So to me, that says that contracts whatever you negotiate now could actually be reopened, because I think that commonly happens when there is a change in the marketplace. And to me, you get to mid-2023, that’s quite a change in the marketplace. So is it likely that contracts could be reopened throughout the course of the year, or is it possible that ABbVie gets at all but up at the start of 2023?
Jeff Stewart
Well, we have thought through that knowing how the biosimilar stays in. And we, of course, in the contractual discussions, we’re contracting throughout 2023. And in some cases, we’re contracting through 2024. Now as you know, Tim, the payers can — they can break contracts. There’s typically out clauses or things of this sort. I would say from my experience, that’s exceedingly rare that in a midyear, particularly for something that is important on both sides that would be — that would happen. So I’d say, it’s unlikely that had happened. But it’s always a possibility that one of the payers basically would try to make a midyear move. But as Rob highlighted, those have been — those actions or potential actions, which again I would characterize as very unlikely would be contemplated in our contracts.
Tim Anderson
Okay. A couple of other questions here and then we can shift to a different topic. Your view of the role of interchangeability designation for the biosimilars and whether that’s kind of a game changer as that starts to unfold. Amgen seems to downplay its importance, at least in the early days of launch, I think almost even through all of 2023. I can’t remember how to characterize it exactly. Now maybe they’re saying that, because they don’t have interchangeable status at the outset. So maybe it’s a self-serving comment, but doesn’t interchangeability lead to kind of a step change in how the dynamics play out?
Jeff Stewart
I think our view on that is probably similar to Amgen, which is we don’t think it’s a game changer. We think it’s an incremental benefit, if those — if one or more of those were chosen by the payer, but they have to go through the calculus over what is it interchangeable to? Does it have the citrate? Does it not have the citrate? There’s different aspects of that. So we think it’s a modest benefit to have interchangeability.
The reason why we don’t think it’s a full game changer is because of the distribution and the controls that the big payers have anyway. So the vast, vast majority of the volume goes through specialty pharmacy. So, for example, maybe 18 specialty pharmacies in the country where the most of the volume sits. And then there’s a lot of concentration, of course, in the big three. So, for example, Accredo for Express Scripts. So they have a lot of control regardless of that interchangeability designation. And so I would say not a game changer incremental help for a payer as they would think through some of their strategic moves over time.
Tim Anderson
Okay. Last biosimilar question, which is who do you think wins on biosimilars? Is it just going to be the companies that has the lowest price, or do you think it’s going to be a trusted manufacturer? The reason I say that is Amgen talks about how relative to so many other future sellers. It’s a trusted manufacturer and payers know that they can have continuous supply. So what are the variables that are going to dictate who are the successful sellers of biosimilars?
Jeff Stewart
Yeah, I think it’s very good question. I think it’s the latter. I think it’s the idea that you have a good offering. So, for example, you need to think it needs to be lower pain. It needs to be high concentration, it needs to be close to Humira as you can make it, and you need consistent supply, because we don’t see around the world that you see payers. And again we only have the international experience, but it’s meaningful like you’re going to have constant switching between interchange — or between biosimilars.
So always every quarter going to the next round, because the pains are different. Sometimes they’re syringes sometimes they don’t have the right doses. So I think you’ll see a lot of losers in this biosimilar space. I mean, there’s going to be 10 and you’re going to only have a few winners. You’re not going to have 10 people split up the market. That’s my personal view. That’s our analysis that we’ve done. I do think it’s very important to think about the offering, the manufacturer and the continuity of supply.
I can tell you recently when there was the 483 on Alvotech that moved the payers around a little bit, because they’re very thoughtful and they’re thinking like who am I going to dance with particularly early in the biosimilar evolution, and they want to make sure that the offering is right, they can communicate to their providers in the right way. And ultimately that they can have continuity supply particularly if they were to try to do wholesale switching at some point, which again we don’t anticipate in 2023.
Tim Anderson
Yeah. Okay. Moving to Aesthetics, a great business one that’s dominated by AbbVie. You talked about economic pressures on the business, which is not unexpected. And you’ve mentioned how that’s primarily Juvederm and body contouring and not really the toxin side of the business implying that the demand is more inelastic there. So is that a fair characterization? And does that hold true not only in the US, but also in international markets in terms of toxins being the more protective class in product?
Rob Michael
Yeah. So if you look at just how we’ve changed guidance, we took it down by $600 million from 5.9 to 5.3. About a couple of hundred million of that was actually a stronger dollar. So if that wasn’t clear there was an FX impact. The rest of it as you mentioned was really is fillers and body contouring because they have higher price points, whereas, BOTOX Cosmetic globally, I mean, we had guided to $2.6 billion this year. We’re still going to deliver $2.6 billion. So the guidance impact really was on fillers and body contouring and foreign exchange.
So overall I’d say BOTOX Cosmetic has held is strong. The growth is slow, but it’s still growing. We would have overachieved that guidance had it not been for the recent pullback. So I think BOTOX Cosmetic has sustained itself through that.
When I look at US versus international they are different markets. There’s been a greater impact in the US from what we’ve seen. We see fair but there’s also a lot of strong growth coming from some of these international markets think of China, Japan, Brazil. And so we – as I think about the impact on the guide, it’s really mainly been a US impact not to say some of these other markets don’t have economic pressure. But if you think of like Europe, it represents about 10% of the global revenue for aesthetics. So we’re not exposed and that’s probably seen a little bit more of the economic impact. We’re seeing so robust growth in China. And so really we’ve seen more of a US impact on our guide this year.
Tim Anderson
In terms of how AbbVie manages a business like this during a downturn, are there levers you try to pull to increase demand, so you could advertise more for example, you could discount the products as an example, or conversely maybe you just led demand be what it is and you actually just try to manage the bottom line impact and you pull back spending and promotion and that sort of thing until the economic cycle kind of comes back. So what leverage do you pull?
Rob Michael
This is a business with the long-term growth prospects. It makes sense to continue to invest. I mean while the market growth has slowed, consumer interest is still very high. We just launched DTC in September. We had the Botox Day promotion this week. So the levers we look at are really those that will drive treatments into the office. And that’s the relationship we have with our customers.
As we think about just the portfolio overall, if the things that will bring new patients and returning patients into those practices, things like we’re launching Botox, the filler line or jawline, skin bev [ph] and Q1 for skin quality. So we’re still investing in this business. We’re looking for driving innovation, finding ways of driving those consumers into the practices, although the growth has slowed but it does rebound very quickly as we’ve mentioned before.
We looked as before, it was down high single-digits in ’08 ’09 and then it grew mid-teens for the next decade. So the way we view it we’ve got obviously, our Allergan Medical Institute. We do injector training. That not only helps with patient outcomes but it builds loyalty with our customers. We’re investing to invest heavily in growth markets like Japan and China. We’re launching a dermal filler, HArmonyCa dermal filler in Latin America. So we’re viewing this as continuing to invest in the business.
So that’s one of the advantages of while, I’d say, all the aesthetics companies have an exposure to the economy is not one I think that’s more insulated than the others. But being part of AbbVie, where more than 90% of our business is insulated. We have more flexibility I would say with investors where some others may have to pull back, we don’t necessarily feel a need to pull back.
We continue to focus on growing this over the long term. We’ll manage through this transient period, where we’ll see the economic pressure but that will be well positioned. And I think we also saw that frankly during the pandemic, where we did through that supporting our customers doing I’d say, low cost things like extending payment terms, product return policies, just they don’t cost that much but they go a long way in maintaining that relationship, building relationship with our customers. We did things like that during the height of the pandemic. And clearly, we saw the strong growth in the year that followed. So there’s a lot of levers we can pull to continue to drive the long-term growth at aesthetics.
Tim Anderson
Two more questions in aesthetics and then we’ll let you go. So right now in aesthetics the way I look at it is it’s AbbVie and then a bunch of really small competitors. And I’m surprised by that. And I keep waiting for another big multinational to jump into the mix either through organic development or through M&A. Any suggestion that that’s on the horizon? I don’t hear any of my other companies talking about aesthetics and kind of getting end of that into the market and it just doesn’t make a lot of sense.
Rob Michael
Our intelligence doesn’t point to that occurring. I would say, you’re going up against – I mean we have the RAN equity of Botox. We have the breadth of the portfolio. We have a large footprint with our sales force.
We have good relationships with many customers. We have a global organization. Well established now and the second largest effect market for us in China. And so we’re strong.
And I’d say if you look at any of our competitors, a lot of the individuals at our competitors came out of Allergan. And so it is — we have I think a tremendous amount of experience in this space. We continue to invest heavily and growing it.
And so I can’t speak for what others are thinking. I think we’ve been able to manage through competitive pressure in the past. We will continue — we expect that to continue.
We feel we’re in a position of strength, but we’ll see what develops in terms of other multinationals that about getting in the space. I think you’d be going up against a very strong competitor in Allergan.
Tim Anderson
Last question which is on obesity. So to me it seems like that would be almost priority number one for the company in terms of getting into this space. It complements your existing brands and aesthetics.
It’s a category that’s presumably sensitive to promotion and effective marketing which AbbVie is very good at doing. So am I right to say that obesity is a very high focus for the company or no?
Rob Michael
Well, when you think about it from a — there’s just treating it through the therapeutic channel. And then, as you think about, we’ve got like the body contouring that third leg of the stool for aesthetics, it’s something we would be as we look at the landscape, if there is an interesting opportunity we certainly — you’ve seen us do things maybe not specific to obesity, but think about the cellulite opportunity with Soliton.
The investment we’ve put behind, CoolSculpting and body contouring. So there has been that leg of the stool. But clearly as we look at opportunities, if there was an interesting opportunity there we would consider it.
Tim Anderson
Great. Okay. I think we’re out of time. We need to let you guys go. So Rob, Jeff, Scott, Neil and Liz thank you very much, for your participation today. Hope you have a good rest of your day.
Rob Michael
Thank you.
Liz Shea
Thank you, everybody.
Rob Michael
Thank you, everyone, again.
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