AbbVie Inc. (ABBV) Q3 2023 Earnings Report, Transcript and Summary

Good morning and thank you for standing by. Welcome to the AbbVie Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer portion of this call. [Operator Instructions] I would now like to introduce Ms. Liz Shea, Senior Vice President, Investor Relations. Thank you. You may begin.

Good morning and thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Rob Michael, President and Chief Operating Officer; Jeff Stewart, Executive Vice President and Chief Commercial Officer; Scott Reents, Executive Vice President and Chief Financial Officer; Carrie Strom, Senior Vice President, AbbVie and President, Global Allergan aesthetics; and Tom Hudson, Senior Vice President, R&D and Chief Scientific Officer. Joining us for the Q&A portion of the call is Roopal Thakkar, Senior Vice President, Development and Regulatory Affairs and Chief Medical 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 will take your questions. So with that, I will turn the call over to Rick.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. AbbVie continues to perform exceptionally well. We once again delivered an excellent quarter with results ahead of our expectations. We are now several quarters into the U.S. biosimilar event for Humira and continue to effectively manage erosion. We have been able to maintain significant volume with the majority of the impact to date driven by lower price. Importantly, our growth platform, the base business excluding Humira, which includes a well-diversified portfolio with multiple leading products in highly attractive markets across immunology, neuroscience, oncology, and aesthetics continues to demonstrate robust performance and outperform expectations. This platform, which is the critical driver in our return to rapid growth in 2025 and beyond, delivered strong double digit revenue growth this quarter, a considerable acceleration from the first half of this year. We anticipate this platform, which is led by Skyrizi, Rinvoq, Vraylar, and Botox will continue to drive significant revenue growth going forward. At the same time, we have several promising R&D programs with the potential to contribute meaningfully in the latter part of this decade and into the 2030s. This includes next generation approaches in immunology, a focus on bispecifics, ADCs, and novel I-O in oncology, as well as innovative therapies to potentially treat a range of neuropsychiatric and neurodegenerative disorders. In summary, I'm extremely pleased with the continued strong momentum and execution across our business. The growth platform is substantially outperforming our expectations, giving us the confidence to once again raise our financial outlook, including upgraded guidance for floor earnings, which Rob will share momentarily. And further underscoring our confidence in AbbVie's long-term outlook, today, we also announced an increase in our quarterly dividend, which we have grown by more than 285% since our inception. With that, I'll turn the call over to Rob for additional comments on our business performance. Rob?

Thank you, Rick. Our results once again demonstrate the strength of our broad portfolio and support AbbVie's long-term growth outlook. We reported adjusted earnings per share of $2.95, which is $0.14 above our guidance midpoint. Total net revenues were $13.9 billion, roughly $225 million ahead of our guidance. The performance of our ex-Humira growth platform continues to be very strong with revenue growth above 12% this quarter, including more than 50% growth from both Skyrizi and Rinvoq, our best in category immunology medicines. We continue to anticipate that these two products will collectively exceed Humira peak revenues by 2027 with robust growth expected into the next decade. Neuroscience also delivered strong performance with operational sales growth of more than 20% this quarter, driven by our leading portfolio for migraine and psychiatric conditions. And lastly, aesthetics performance was highlighted by the return to growth of the U.S. toxin market. This outstanding execution across our well-diversified portfolio gives us the confidence to once again raise our near-term financial outlook. We are increasing our full year revenue guidance by $600 million and have now raised total revenue by $2 billion since our initial guidance in February, including more than $1.4 billion from our ex-Humira growth platform. As a result, we are also raising our full year adjusted earnings per share guidance by $0.25, and now expect adjusted EPS between $11.19 and $11.23. Given the strong momentum of our growth platform, which is significantly outperforming our expectations this year, we are now raising the floor guidance for 2024 adjusted EPS to $11, which is $0.30 better than our previous expectations. This floor guidance continues to exclude any impact from IPR&D expense. As is our typical practice, we'll provide our formal EPS guidance range for 2024 on the fourth quarter call. Finally, today, we are announcing a 4.7% increase in our quarterly cash dividend from $1.48 to $1.55, beginning with a dividend payable in February 2024. Since inception, we have grown our quarterly dividend by more than 285%. In summary, I'm very pleased with the strong execution across our portfolio. We remain confident in our long-term outlook, including a return to robust revenue growth in 2025 with a high single digit CAGR to the end of the decade. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff?

Thank you, Rob. We once again delivered strong results across our therapeutic portfolio this quarter. I'll start with immunology, which delivered total revenues of nearly $6.8 billion exceeding our expectations. Skyrizi and Rinvoq continue to demonstrate impressive growth and are now on pace to deliver approximately $11.6 billion in combined sales this year. This performance is especially encouraging, recognizing that we are still in the early launch phase for both assets and IBD, an area of high unmet need where we are very competitively positioned with two complementary assets, each having generated strong response rates and durable remission across our development programs. Skyrizi total sales were $2.1 billion, reflecting operational growth of more than 50%. This robust performance includes further share gains in psoriasis, where we remain the clear market leader, capturing roughly one-third of the total prescriptions in the U.S. biologic market, and approximately 50% of in-play patients who are either new to therapy or switching. Increasing momentum in psoriatic arthritis, where Skyrizi is now the leading in-play biologic therapy in the U.S. dermatology segment, as well as continued rapid uptake in Crohn's disease where we are capturing roughly one out of every four in-play patients. Importantly, we recently announced positive results from SEQUENCE the ninth and perhaps the most impactful head-to-head study across our development program for Skyrizi and Rinvoq. SEQUENCE is a Phase 3 head-to-head study in Crohn's, which demonstrated Skyrizi's superiority versus Stelara across key efficacy parameters, including impressive, statistically significant differences in both clinical and endoscopic remission. The detailed data from this trial were presented earlier this month, and we plan to share the findings more broadly now via our medical personnel and representatives in the field. We anticipate these strong head-to-head results will clearly support Skyrizi as the best in category therapy for Crohn's, which is important for continued rapid share capture. So based on this very positive data as well as our continued momentum, we will be once again raising the full year sales outlook for Skyrizi. Moving now to Rinvoq, which delivered global sales of $1.1 billion, reflecting operational growth of nearly 60% with increasing prescriptions across each of the approved indications. In particular, I am very excited about Rinvoq's growth potential in gastroenterology, where uptake is exceeding our expectations. In ulcerative colitis, Rinvoq is now capturing more than 25% total in-play patient share in the U.S. second-line plus setting, nearly at parity to the current market-leading therapy. And in Crohn's disease, Rinvoq is ramping very significantly. The inflection we are seeing is even faster when compared to our time aligned launch in UC just last year. Given this impressive momentum in IBD, we will now be raising our full year sales outlook for Rinvoq. Global Humira sales were more than $3.5 billion, down 36.2% due to biosimilar competition. The erosion impact in the U.S. played out largely in line with our expectations this quarter, while performance across our international markets is trending better-than-expected. Turning now to oncology, where total revenues were $1.5 billion. Imbruvica global revenues were $908 million down 20% and consistent with our expectations. Venclexta global sales were $590 million, up 14% on an operational basis with strong demand for CLL and AML across our key countries. The U.S. launch of at EPKINLY in third line plus DLBCL is also tracking well with commercialization also now underway in Europe and Japan, following the recent respective approvals. In neuroscience, total revenues were more than $2 billion, up 22% on an operational basis. Vraylar continues to demonstrate robust growth. Global sales of $751 million were up 35.4% and we have seen a significant uplift in new prescriptions across all indications, following the approval as an adjunctive treatment for major depressive disorder late last year. Our leading oral CGRP portfolio for migraine contributed $365 million in combined sales this quarter, reflecting growth of nearly 65%, as we continue to see strong demand for both Ubrelvy and Qulipta. Atogepant was also recently approved as a new therapy in Europe branded as Aquipta, where it is the only once-daily oral CGRP for prevention of both episodic and chronic migraine, further strengthening our competitive product profile and long-term growth opportunity. Lastly, total Botox Therapeutic global sales were $748 million, up 7.4% on an operational basis, reflecting momentum in chronic migraine as well as other approved indications. So overall, I am extremely pleased with commercial execution across the therapeutic portfolio, especially with our growth platform, which is demonstrating strong revenue growth. And with that, I'll turn the call over to Carrie for additional comments on aesthetics. Carrie?

Thank you, Jeff. Third quarter global aesthetics sales were approximately $1.2 billion, an operational decline of 4%. In the U.S., aesthetic sales of $759 million were roughly flat to last year as growth for Botox Cosmetic was offset by declines in other brands that continue to be impacted by lower consumer spending related to inflationary pressures. U.S. Botox Cosmetic sales were $388 million, an increase of 5%. We are beginning to see a recovery in the U.S. toxin market, which posted positive year-over-year growth in the third quarter following three consecutive quarters of declines due to economic pressures. Botox continues to perform very well despite increasing competition. It remains the clear market leader with a strong and stable share, and we have seen little to no share impact from new competitive entrants. U.S. Juvederm sales were $116 million in the third quarter, a decline of 6.4% versus prior year as recovery in the facial filler market continues to lag the cosmetic toxin market. The filler market is improving, however, as a higher priced, more deferrable procedure relative to toxins. The segment of the aesthetics market continues to be suppressed by lower consumer spending. In the third quarter, the U.S. facial filler market was down low teens percentage compared to the prior year. Juvederm remains the market-leading facial seller in the U.S. and share was stable in the quarter. While the U.S. facial injectable markets continue to be impacted by lower consumer spending in this inflationary environment, we are seeing signs of stabilization and even a return to growth in the cosmetic toxin segment. This gives us confidence in a stable to improving outlook in the U.S. as we end this year and enter 2024. Internationally, third quarter aesthetic sales were $480 million, representing an operational decline of 9.7%. As anticipated, year-over-year performance in the quarter was impacted by a shipment timing benefit we experienced in the third quarter of last year. Results were also impacted by softening economic conditions across major international aesthetic markets, primarily China. Despite the economic pressures that are currently impacting our aesthetics portfolio, we remain very confident in its long-term growth outlook. In September, we began launching Skin Vive in the U.S. And in the next few years, we plan to launch new indications for Botox in the lower face segment, and our novel fast-onset, short-duration toxin BoNT/E. In addition to our R&D programs, we have a robust Alle technology pipeline, which will bring new tech products into the U.S. market to help our customers acquire, retain and cross-sell more aesthetic patients. Our strong leadership positions in both cosmetic toxins and facial fillers combined with the significant investments we're making to drive market acceleration will position us for strong growth going forward. With that, I'll turn the call over to Tom.

Thank you, Carrie. In immunology, we had two important milestones in the third quarter for Skyrizi in inflammatory bowel disease. Following completion of the Phase 3 maintenance trial in ulcerative colitis. We submitted our regulatory applications for Scares in this indication in the U.S. and Europe with approvals anticipated in 2024. We also recently presented results from the SEQUENCE head-to-head trial comparing Skyrizi to Stelara in patients with moderate to severe Crohn's disease. We're extremely pleased with how Skyrizi performed in this study, which enrolled very difficult-to-treat patients who all failed anti-TNF therapy. Skyrizi met the primary and all secondary endpoints in the trial, demonstrating clear superiority to Stelara on all endpoints at week 48 and with a more than doubling of effect in endoscopic remission at 32% of Skyrizi versus 16% for Stelara and endoscopic response at 45% versus 22% for Stelara. Furthermore, steroid-free clinical remission was 61% for Scares versus 40% for Stelara. So these compelling head-to-head Crohn's data combined with the additional indication approval for ulcerative colitis expected next year will further position Skyrizi as a highly effective, durable, safe and well-tolerated treatment option for patients with moderate to severe inflammatory bowel disease. We continue to make very good progress with the second wave of Rinvoq development programs as well in addition to the ongoing Phase 3 programs in GCA, lupus and HS, we recently began the Phase 3 program for Rinvoq in Alopecia Areata. We also recently announced positive top line results from a Phase 2 study for Rinvoq in vitiligo. In this study, Rinvoq met the primary and all secondary endpoints at week 24 and demonstrating a significant improvement in both facial and total body vitiligo scoring measures compared to placebo. Importantly, these results continued to improve through week 52 of the study illustrating Rinvoq's potential to provide significant skin repigmentation to patients suffering from vitiligo. Based on these results, we're advancing Rinvoq to Phase 3 in this indication with studies expected to begin soon. Moving to oncology, where in the quarter, we received approval in Europe and Japan for epcoritamab as a monotherapy treatment for patients with relapsed or refractory DLBCL, were received two or more systemic therapies. These approvals represent important regulatory milestones for EPCO, and we look forward to bringing this new subcutaneous treatment option to patients in these international markets. We also continue to make good progress with the development programs in earlier lines of DLBCL and follicular lymphoma and we look forward to providing updates on these programs as the data mature. In our Venclexta multiple myeloma program, we recently announced top line results of a Phase 3 CANOVA trial evaluating Venclexta plus dexamethasone compared to PomDex in relapsed/refractory patients with a T114 mutation. In this study, the primary endpoint of IR CSS PFS was longer with VenDex versus PomDex but did not meet statistical significance. accommodation also resulted in numerically higher response rates and longer overall survival compared to PomDex. While the differences in efficacy measures were not statistically significant, we believe the totality of the data show a benefit with the Venclexta combination and we plan to discuss the results with regulatory agencies. We'll provide updates on the program as they become available. Behind Venclexta, we have several exciting multiple myeloma programs emerging from our earlier stage pipeline. We continue to make good progress with our BCMA CD3 bispecific ABBV-383 and where we're nearing completion of the dose optimization work and are on track to begin Phase 3 studies in the first half of next year. At an upcoming medical meeting, we plan to present updated Phase 1 efficacy and safety results as well as monthly administration dose data. We're also making good progress with our next-generation BCL2 inhibitor, ABBV-53, which is currently in Phase 1 studies and we'll provide updates as the data become available. Now moving to Neuroscience, where in the quarter, we received approval for Aquipta in Europe, which is now the only oral CGRP antagonist approved in Europe for prevention of both episodic and chronic migraine. And lastly, in our aesthetics pipeline, we recently announced top line results from a second Phase 3 study evaluating Botox in platysma prominence, similar to results from the first Phase 3 study, all primary and secondary endpoints were met with Botox demonstrating a significant reduction in platysma prominence and vertical neckband. We anticipate a regulatory submission in the U.S. here the end of the year. In addition to indication expansion for Botox, we continue to advance our novel toxin pipeline. We recently announced positive top line results from two Phase 3 trials evaluating BoNT/E, our rapid onset, short-acting novel toxin in glabellar lines. BoNT/E performed very well in both studies meeting the primary and all secondary endpoints compared to placebo. BoNT/E was well tolerated and no safety concerns were identified. We're very pleased with these results, which demonstrate this toxin's rapid onset of action and short duration of effect. Patients treated with BoNT/E showed an improvement in glabellar lines as early as 8 hours following injection and a duration of effect of 2 to 3 weeks. This highly differentiated clinical profile could offer patients a novel option compared to currently available neurotoxins. We plan to complete the remaining development work over the course of the next few quarters and anticipate submitting our regulatory applications in the second half of next year. So in summary, we continue to make good progress across all stages and therapeutic areas of our pipeline, and we look forward to several more important milestones in the remainder of this year, including Phase 2 data for Teliso-V and second line plus advanced non-squamous non-small cell lung cancer, which has the potential to support an accelerated approval. Phase 2 proof-of-concept data for our anti-IL-1 alpha beta bispecific antibody, lutikizumab in hidradenitis suprativa, and regulatory approval in Europe for ABBV-951, our novel subcutaneous levodopa, carbidopa delivery system for advanced Parkinson's disease. We also plan to submit updated 951 data in the U.S. near the end of the year. With that, I'll turn the call over to Scott.

Thank you, Tom. I'm very pleased with the momentum of our business. The strong performance we are demonstrating from our ex Humira growth platform continues to support AbbVie's long-term growth outlook. Starting with our third quarter results. We reported adjusted earnings per share of $2.95, which is $0.14 above our guidance midpoint. These results include a $0.04 unfavorable impact from acquired IP R&D expense. Total net revenues were $13.9 billion, roughly $225 million ahead of our guidance and down 5.8% on an operational basis excluding a 0.2% unfavorable impact from foreign exchange. Importantly, these results reflect double-digit sales growth from our ex-Humira growth platform. The adjusted operating margin ratio was 46.7% of sales. This includes adjusted gross margin of 83.5% of sales, adjusted R&D investment of 12.4% of sales acquired IP R&D expense of 0.5% of sales and adjusted SG&A expense of 23.9% of sales. Net interest expense was $398 million. The adjusted tax rate was 15.7%. Turning to our financial outlook. We are raising the midpoint of our full year adjusted earnings per share guidance by $0.25 and now expect adjusted earnings per share between $11.19 and $11.23. This guidance does not include an estimate for acquired IP R&D expense that may be incurred in the fourth quarter. We now expect total net revenues of approximately $54 billion, an increase of $600 million. At current rates, we expect foreign exchange to have a 0.5% and unfavorable impact on full year sales growth. The updated revenue forecast contemplates a full year sales increase of $300 million roughly split evenly between Skyrizi and Rinvoq, reflecting strong uptake in IBD. The remaining $300 million full year sales increase is primarily attributed to better-than-expected performance of international Humira and Restasis. Moving to the P&L. We continue to forecast an adjusted operating margin ratio of approximately 46.5% of sales. We now expect adjusted net interest expense of roughly $1.7 billion. And we forecast our non-GAAP tax rate to be approximately 15.5%, reflecting IP R&D occurred through the third quarter. Turning to the fourth quarter. We anticipate net revenues of approximately $14 billion. At current rates, we expect foreign exchange to have a modest unfavorable impact on sales growth. We expect adjusted earnings per share between $2.87 and $2.91. This guidance does not include acquired IP R&D expense that may be incurred in the quarter. Finally, AbbVie's strong business performance continues to support our capital allocation priorities. We generated more than $16.5 billion of adjusted free cash flow which is net of approximately $1.1 billion of Skyrizi royalty payments in the first 9 months of the year. And our cash balance at the end of September was approximately $13.3 billion. Underscoring our confidence in AbbVie's long-term outlook, today we announced a 4.7% increase in our quarterly cash dividend, beginning with the dividend payment in February of 2024, and we remain on track to achieve by the end of this year, $34 billion of cumulative debt paydown since the Allergan transaction, maintaining a net leverage ratio around 1.8x. In closing, AbbVie has once again delivered outstanding results and our financial outlook remains very strong. With that, I'll turn the call over to Liz.

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, we'll take the first question, please.

First question comes from Chris Shibutani with Goldman Sachs.

The 2024 earnings guidance, it seems as if you were quite confident heading in that $11 floor. As we await further details from top line and other margin structures, can you maybe identify some of the key push pulls that actually gave you that conviction to go to above and where directionally we should be thinking about the source of further growth on the forward?

Chris, it's Rob. I'll take that question. So since we provided that guidance in February, recall we gave a $10.70 EPS floor to really help investors model earnings regardless of whether the trough recurred in '23 or '24 we've raised growth platform sales by $1.4 billion covering immunology, neuroscience and aesthetics. We're seeing the IBD indications for Skyrizi and Rinvoq very nicely, and we continue to capture more share in their other indications, both Vraylar and our migraine portfolio have outperformed our share forecast and the strong recovery of Botox has led us to raise guidance for aesthetics twice this year. So given the clear over-performance of the growth platform, we decided to raise the floor to $11 ex IPR&D. We hope this provides investors the view of the low end of the 2024 guidance range and also confirms that '24 will indeed be the trough year. And given that we expect to deliver a high single-digit CAGR from '24 to the end of the decade, it should allow investors to value the company with a better growth multiple.

Our next question comes from Mohit Banse with Wells Fargo.

And I have a question regarding aesthetic. So it seems like you are keeping the guidance here. So the first part of the question is it seems like across the board, there is a 10% quarter-over-quarter decline on all the products. Can you help us understand what's happening sequentially? And then if you are keeping the guidance, it seems like there would be quite a bump in fourth quarter. So how should we think about that?

Maybe I'll start -- this is Rob. I'll start with your question. So one thing to keep in mind is that we mentioned in the last call that we had some dynamics in the international market when you look at the growth rates where we had more difficult comparison because of some of the -- some stocking that occurred in the prior year, that's something to keep in mind. We also do have a certain amount of seasonality that occurs in our business in the U.S. in particular. So those are things to keep in mind. I'd say as we look at it, we're very encouraged by the return to growth of the U.S. toxin market. Botox is performing very well, and we're certainly doing a very nice job maintaining our share position despite competitive pressure. So I'd say we're very pleased there. I'd say on fillers, what we're seeing is probably more of a lag in the recovery. And if we've studied this market historically, we do tend to see a lag and that's really relative to thinking about the price point for fillers versus toxins. It's natural to assume that the recovery will take a little bit longer. So we are seeing that recovery take a little bit longer. We're still very, very encouraged by the trends we're seeing. We're very excited about the new fillers we've launched, both SkinVive and Volux. We're starting to see some nice share momentum come from those new introductions. And so from that standpoint, we feel very good. And then as we've been monitoring the situation in China, as all of you I'm sure have been watching very carefully. We saw, as you recall, a very strong recovery in the first half of the year. We've seen it moderate, and we're keeping a close eye on that. And so that's something we're obviously paying a lot of attention to. Now we look at the rest of the international business, it's growing nicely. And so as I think about the guidance for this year, I'd say we're fairly close. We're not overly concerned. We don't adjust guidance for plus or minus $100 million. If it was greater than that, we would consider it. So that's something to keep in mind. But as we look at this, the long-term outlook for this business, we're very confident. When you think about the U.S. toxin market, it's historically grown in the mid-teens and it's still heavily underpenetrated in the low single digits. And market growth is really the key to deliver on our long-term outlook. We've seen this market rebound very strongly following a period of economic pressure, and we've demonstrated time and again that we can increase new patient starts for our promotional efforts. And something I think probably isn't appreciated is that we do have several innovations that can accelerate that growth. And when you think about the master and platysma indications for Botox, those can each add a few hundred million dollars. Our novel short-acting toxin BoNT/E has the potential to activate new patients that could really drive an inflection in market growth. As you think about one of the biggest barriers for new patients is fear of an unnatural look, and the short-acting toxin opportunity is a great way to unlock that. And then if you look at our regenerative fillers pipeline, those are aimed at providing both short- and long-term treatment benefits for consumers. And as I mentioned, we're also very excited about the new fillers we've launched both SkinVive and Volux. So with this business, you see us go through some cycles with economic pressure. But over the long term, we feel very confident that we can certainly deliver very robust growth and deliver on that real than $9 billion expectation for 2029.

Lee, this is Rick. The other thing that you're looking at sequentially, you have to keep in mind is we do Botox today in the fourth quarter. So that elevates revenue in the fourth quarter, and that occurs every year. So if you're looking at third quarter to fourth quarter and trying to understand why is there a big step up, part of that step-up is that.

Operator next question please.

Our next question comes from Chris Schott with JPMorgan.

Just maybe a two-parter really focused on immunology for 2024. So maybe first on Skyrizi and Rinvoq, I guess, with more of the '24 formula discussions complete, we're seeing some great volume trends. But are you still comfortable that we should expect more normalized price erosion for those two products versus the high single digits we're seeing this year? And then the second one was on Humira for 2024. And I think, Rob, you might have commented last quarter of your comfort with where consensus sits. And again, maybe a similar question with maybe more color about formulary for next year. Is that something you're still comfortable? And just how should we think about dynamics there?

Yes. It's Jeff. I'll take the first question. Yes, we're very comfortable as we see things start to evolve and close here as we move into 2024. I mean if you think about all the indications that we've had 7 over the last 18 months, I highlighted in my remarks, 9 head-to-head trials. We're just a very, very nice position for Skyrizi and Rinvoq as we move into '24 to continue some very strong momentum that we're seeing in the actual. So quite confident in terms of how we're looking at that. And to your key point there on the price, we continue to see that we're not going to have a repeat of what we saw this year. And remember, the background there were those 7 indications that came very fast all on top of each other. And so that was the root cause of that -- of those concessions that won't repeat. Next year, we have really one more big indication, not 7, and that's Skyrizi you see that Tom highlighted. So we'll see the normalized price erosion more in line with industry forms versus what we saw this year.

And then, Chris, this is Rob. On HUMIRA, I think if you think about the annualization rebates that given the rest increase in the second half of this year, so you have an annualization impact, and the additional rebates to secure parity access next year, really price should be the main driver of the erosion in '24. I mean volume will have an impact, particularly in wax sensitive accounts, but price will make up the vast majority of the erosion next year. And while we're not giving '24 guidance today, as you've mentioned, Chris, I've highlighted the average, it was about $7 billion when I mentioned that was a reasonable expectation for U.S. Humira next year. Now there are a few animals who have forecasted U.S. Humira above $8 billion next year, which is just not a reasonable expectation given the price dynamic.

Next question comes from Terence Flynn with Morgan Stanley.

Obviously, you guys are very well positioned coming out of the Humira LOE in terms of the growth franchise. But I think there's focus from investors on maybe bolstering the pipeline. So as you guys think about M&A and business development, maybe you could just walk us through your latest thoughts and anything in terms of therapeutic areas of interest and stated development.

Okay. Terence, this is Rick. I'll cover it. That question for you. Yes, I think as we look at the business, as Rob indicated, we're extremely comfortable with how the growth platform is performing. And I'd say how we're managing the biosimilar erosion, which gives us a lot of confidence that we can deliver this high single-digit going forward. From '25 -- going forward through the end of the decade. So I'd say the bulk of what we're looking at, and we're in a fortunate position from that standpoint. There are many companies in our sector we need to go out and do lots of BD to be able to drive the growth that they're trying to achieve. We're not in that position. But I'd say the bulk of what we're looking at is we're looking to add assets that could give us incremental pipeline and revenue growth towards the end of this decade and into the 30s. That's what our -- the bulk of our focus is on. . And I'd say if I look at AbbVie's track record, certainly, BD has been a critical part of how we've grown this company over the last 11 years. And I'd say, for the most part, we have done a pretty good job when we acquire assets and bring them in we can make them perform quite well. Skyrizi is a good example of that. Certainly, Allergan was another good example of that, and there are many others. So I'd say we value BD as a very important tool and how we should grow the business and how we should position our leadership positions in these franchises. Our primary focus is within the franchises that we're operating in. So let's take immunology as an example. I would say our greatest focus in immunology is to continue to add additional mechanisms in particular, that could be used in combination in order to create deeper levels of clinical response in areas like IBD, rheumatology and other areas. So we continue to look for those. We have several already that are in development now, like Luti, like RIPK1 and several others in our pipeline, but we'll continue to look for additional assets that we could add to that. And like I said, especially focused on combination therapy because we think that is the way to get much deeper clinical remission or responses in those patients who aren't responding to things like Skyrizi, Rinvoq, which obviously performed exceptionally well. So that's a big area. Oncology is another big area. We have a high level of interest in next-generation CAR-T technology. We have a high level of interest in T cell engagers beyond our BCMA product. I think as we look at that asset continue to develop, we are very convinced it has a best-in-class profile. And it shows us that for the right indication, T cell engagers can be extremely effective, and they're much easier to use and can be much more broadly brought to patients and CAR-Ts, at least the current version of CAR-Ts. So I'd say that's an area that we have a high level -- in psychiatry, we're interested in additional assets in anxiety and mood, and a variety of other assets, but that gives you some feel for it. And we obviously have the financial wherewithal to go out and do transactions. We need to make sure we find the right transaction. So it's a value-enhancing asset for the company. And when we find them, we will act on and we will act on quickly.

Next question comes from Tim Anderson with Wolfe Research.

This is Alice Nettleton on for Tim Anderson. A question on obesity and its interface with I&I and a lot of other drug categories, frankly, are views that payers have to cover OBD medicines. And if that's correct, it's a big expense, and payers will be looking for offsets. One-off that would be for payers to squeeze other therapeutic areas as hard as they can. An example could be I&I, where there's now a really good product, your own HUMIRA at a much lower price. So we're wondering how much payers might start to force a step edit for products like Skyrizi? It's a relevant question because yesterday, one of the issues Bristol noted with its TYK2 product is step edits and they cite biosimilar Humira as the reason.

Thank you for the question. It's Jeff. And I think you've got to take a step back regardless of the obesity issues and think about the overall strategy that we pursued, which was 1 of fundamental distinction. And I'll take your point over some of these head-to-head trials, and there's 9 of them, right? So if you take Skyrizi, just in psoriasis, we have gross superiority versus every mechanism in the category. So a head-to-head of gross superiority versus Humira versus the leading IL-17 COSENTYX versus the oral Otezla, and we also have versus Stelara. So fundamentally, when payers think about stepping or not stepping or how they would think about that, there's a medical dynamic there and that distinctiveness that we have across our program is very, very important to help manage maybe the urge of the payers to think of formulary structures like that. If you think about your comments that you have -- that you heard yesterday or the day before, that's a very different dynamic. I mean, if you're not that different or you have the same efficacy as a Humira, it's not going to go that well on some of these formularies. And so I think you got to take a step back and look at the fundamental distinctiveness that we have on both Skyrizi and Rinvoq. And I think my last comment would be, let's take Reno, which is growing very fast, 60%, okay? All of that is in the second-line plus setting. So from a strategic standpoint, it's already stepped. And so when you take a look at those dynamics, we remain quite confident that as we rely on the power of raising the standard of care, that will help us navigate any of these scenarios, whether it's related to obesity or not.

Next question comes from Vamil Divan with Guggenheim Securities.

I mean, transit right now. But the two questions I have actually, one is maybe building on Terence's question around business development base in the pipeline. I think we get a lot of other questions just around sort of the underappreciated assets within your pipeline. I don't know if you can maybe just comment on that. I know there's a couple of assets that you plan out things people are overlooking where they might be some underappreciated upside? And then the second one is just on the charge you took today or this quarter on Imbruvica regarding the Medicare drug pricing program. And obviously, I understand why you did. I'm curious on the amount and the timing of why you're doing now, I suppose I may be willing to see how the losses play out or negotiation process plays out. And then in terms of the amount or how you -- what your assumptions were that you can share on the competitive dynamics for sort of what you're assuming around the impact this program would have on the pricing of Imbruvica…?

Divan, this is Rick. I'll take the first question, and then Scott will take the second question. So on the pipeline, I think as I look at the pipeline and how we built the pipeline and how it's playing out, I think -- I don't know that I would call it underappreciated because you don't necessarily have access to all the data that we have on some of these programs. But we obviously invested significantly over the last several years in rapidly developing the indications for Rinvoq and Skyrizi and a lot of our focus had been built around that. But in parallel, we were advancing a number of other programs along the way. And I would say the investment that we made on Skyrizi and Rinvoq are pretty clear the kind of return that we are getting for those assets. I mean, they're growing at a phenomenal rate. In fact, in the not-too-distant future, the combination of those two products on a running rate basis will be larger than Humira, to give you some idea of how rapidly those products are growing and how large they are. But if I look at our pipeline, the real meaningful programs that we have in our pipeline that will be true needle movers for the company, there are several of them that are advancing now I think we have a high level of confidence in 400, our topo warhead platform with our c-Met version of that, we're seeing very encouraging data in CRC. We'll follow that with non-small cell lung cancer. And that platform is demonstrating to us that it is a broad-based platform that we can expand to a number of other areas. And that should be a fairly significant opportunity for us going forward. Later sort of the '27, '28 timeframe, I think it's going well have meaningful benefit play through. And then I'd say the second one is 383, our BCMA bispecific. As we indicated earlier, we're seeing more and more data out of that program that clearly tells us this has a best-in-class profile, high levels of efficacy and very good safety and very convenient dosing. We think it has that ideal profile to be able to enter this market. And as you know, multiple myeloma is a very large market. There are very significant products in this market. So those are two opportunities. I would obviously say, $16 million. And some of our TA programs are also exciting programs that are running in parallel to these. We'll be getting more data on those next year. And I think those have significant opportunities as well. The third program I talked about is in our eye care business. It's our REGENXBIO program for both wet AMD and diabetic retinopathy. We're seeing some very, very encouraging data out of that program, and that could be a nice opportunity for us as well, and it continues to advance. So there are a number of important programs that you'll start to see more and more data as we go through '24 and into '25 that I think will give the market an opportunity to be able to better assess those.

Vam, this is Scott. With respect to your question on the Imbruvica charge. So I think a couple of things. As we have signaled in some of our regulatory filings, our last 10-Q, for instance, we had indicated that if we were to be selected in the negotiation process under the Inflation Reduction Act, that there would likely trigger an impairment. And so we had anticipated that this would be happy. And so the timing really relates to the fact that under the rules, you have to look at the fair value of that intangible asset with respect to future cash flows. And so the accounting rules would require that we would make that analysis upon selection as we had kind of previewed in our filings. And so we went through the process under that triggering event to determine what the impairment should be. And I would say that when you look at that impairment, the magnitude of the impairment is driven by a number of factors, but really, one of the biggest factors that you're seeing there is it requires you to discount the future cash flow. So as we calculate the future cash flows, looked at what we had assumed was a reasonable assumption on the price, you discount those back. And so that creates part of the magnitude of this adjustment. In terms of the negotiated price that we assumed, I think we're in the middle of these negotiations, and it really wouldn't be appropriate for us to talk about what that is. But we looked at a number of factors, and we think that process is going to play out. Certainly, we will see on February 1 in a private conversation with CMS what they anticipate at least an initial thought on price, but it won't be finalized until September 1 of next year. And so we will see what that price is as the process plays out.

Next question comes from Steve Scala with TD Cowen.

I have two questions and one clarification. First, a clarification. Is the base year for the high single-digit revenue growth to the end of the decade? Is the base year 2023 -- or excuse me, 2024 or 2025. I think it's '25, but maybe you can clarify that. Second, given AbbVie's stated interest in building the oncology business, I assume that AbbVie took a hard look at the ADC deal that Merck signed with Daiichi. I'm just curious what about it didn't you like -- was it the profile of the products? Was it the price? Or do you feel you have everything you need already? And then the last question is at least 1 other company has changed its tax rate guidance stemming from a recent IRS document clarifying Section 174 tax legislation. Do you have any perspective on this update and why it doesn't impact AbbVie?

Steve, this is Rob. I'll take your first question. So the base year is '24. And if you think about it, we signaled that we expect to return a robust growth in '25. And so that high single-digit CAGR really would pick up that first year of robust growth of 25%. If you start in '25, you miss that your growth. So our intention has always been '24 is a base year and that high single-digit CAGR starts from '24 to the end of the decade.

Steve, this is Rick. I'll take the second question. Obviously, I'm not going to comment on whether we looked at that same transaction and that probably wouldn't be appropriate. But what I can tell you is we knew it was there. So maybe that gives you some idea of our perspective on it. But the reality is, we believe we have what we need with 400. We believe that platform, and we own that platform, we developed it internally. We give us everything that we need in that area. And so it wasn't something that we were looking at. Scott?

Yes. It's Scott. So with respect to the tax legislation, I certainly when can talk about what our facts are. But when we've looked at -- certainly, this results out of tax reform legislation a few years ago. The tax rules, there's always a little bit of uncertainty. And what happened this quarter, there was guidance that came out that, I would say, clarified a certain approach in treatment. Prior to that guidance, though, there was a little bit of a diversity of opinion amongst advisors as to -- and ourselves as to how we might implement. So I would tell you that we were already implementing consistent with how that guidance ultimately came out, and that's why you're not seeing any impact to us on our tax rate.

The next question comes from Gary Nachman with Raymond James.

So first, back to the trough raise in 2024. How are you thinking about spending levels for both SG&A and R&D into the trough year next year to set up for growth in '21 and beyond? Do you have a better sense of where the operating margin might end up next year? And then secondly, Scares and Rinvoq have been doing very well in the IBD indications talk about how much headroom you see for those products in UC and Crohn's with that landscape likely getting more competitive in the coming years? And any updated thoughts on 2025 guidance for those products?

Gary, it's Scott. I'll start with your question regarding operating margin. So when we've looked at the operating margins we talked about in the past, for '23 and '24, we talked about those being very, very similar. So when you think about the operating margin that we've talked about for this year and next year, it's really about 46% to 47% range. This year, our guidance is 46.5% and we would expect operating margin in '24 to be very similar to what we're seeing this year. And then I think as a result, roughly the gross margin is going to be in line in '24 with what we're seeing this year as well as the expense profile. So very consistent with this year. And of course, we'll refine that when we come out with guidance.

Yes. This is Jeff. I'll highlight the -- your comment on the head space and IBD. I mean the IBD market is very, very attractive. If we think back historically, we were always, frankly, a little surprised at how fast Humira back in the day grew when we started to achieve the UC and the Chrome's indications. And again, I would say we're very, very pleasantly encouraged about the momentum. The momentum is very, very significant. So there is significant headroom. And what we see in the market dynamic is that unlike what you might think that patients would always want to rotate off of their medications because of the severity of the disease, actually physicians haven't been able to really move the market very much over the years, simply because it's very dangerous to try to go to another drug that hasn't provided any increase in benefit for those patients. It puts those patients at risk. So when you look at what Tom had highlighted, our ability with two complementary assets -- for example, in the U.S., Skyrizi position in the early lines, Rinvoq position in later lines, both of which have exceptional performance criteria versus the market. That gives us a lot of confidence. The other thing that gives us a lot of confidence because there will be more competitive entries in the future is we think our profiles are going to hold up exceptionally well. And then there's the commercial executional component in most of the countries around the world, we have dual sales forces that basically will carry two products with four big indications. So our ability to compete in the market for share even as it gets a little more competitive over time, is still going to be very, very strong. So lots of headroom in the market, lots of unmet need in the market, and we believe we have the best position in the market for the foreseeable future.

And Gary, this is Rob. On your question regarding 2025 guidance, we do periodically update the long-term guidance for our portfolio. We're obviously very pleased with the momentum we're seeing both from Skyrizi and RNA, particularly in -- if you recall when we provided -- last time we provided guidance for Skyrizi, we had about $2.5 billion of revenue in IBD in 2025 and it was $1.8 billion for Rinvoq. And those are obviously ramping very nicely. We have a lot of confidence. We periodically update that guidance, we'll find the right time to provide a holistic update to our long-term guy. But clearly, the momentum is there. And the Street reflects that, too. I mean if I look at consensus, not for Skyrizi, I think it's around $11 billion. So it's $1 billion higher than our 2025 guide. So I think the market is recognizing the strong momentum, and we'll update that long-term guide holistically at the appropriate time.

Next question comes from Luisa Hector with Berenberg.

To continue with IBD, I just wondered if you could talk a little bit more about the AbbVie pipeline emerging behind Skyrizi and Rinvoq and how we think about that and maybe potential combinations with Skyrizi? And with the recent competitor launch in psoriasis with a label where the FDA has asked to mention anti-TNF safety warnings. I wondered whether the FDA has mentioned anything to you about the review of labor in that regard. .

It's Roople. I'll take the IBD question. So you've heard already some mention of Lutikizumab. That's our IL-1 alpha beta bispecific antibody. That's an in-house antibody. And we have observed data where there's resistance to anti-TNF and other biologics with patients with 1 beta signal. So we'll be entering into ulcerative colitis looking at a potential biomarker approach. But in addition to that, we will also be looking at a set of combinations as was already mentioned, for example, with Skyrizi, we have Lutikizumab. We have other agents as well. RIPK1 was also mentioned. There's also some partnerships that we have is another mechanism we're interested in. And another one I'll mention is an IL-2 mutein. All of these are under assessment. And we do believe either you find a biomarker approach where you can see the high efficacy or if you want to see real transformational efficacy, you're going to have to go a combination approach. So those are the assets we'll be looking at. Now moving on to the question, I think it was around depression and suicidal ideation if I heard it correctly. This was in an IL-17 class agent that was recently approved. We've also observed a similar warning and precaution previously also in the IL-17 class. In fact, that previous asset, in fact, had a REMS in place. Remember, Skyrizi is an anti-IL-23 very different class. And to date, with all the data that's been generated across numerous indications, we don't see that type of signal at all nor do we have any of that in our label. And as we look at psoriasis therapy, that particular agent that's been mentioned has been available in Europe and our physicians really don't tell us that there's much of an uptake there. So Skyrizi continues to perform well. Also, our label does not have the high rate of fungal infections that have been observed with the new 1 in the '17 class -- and also, we've talked a lot about IBD. We -- the Skyrizi doesn't also lead to IBD, which is another risk for the IL-17 class. And also with our dosing regimen -- you get it at 0 and week 4, and then it's quarterly after that. With the new one, I think there's 5 doses that are required and potentially every 8 weeks or in heavier patients every 4 weeks. So we're very confident in Skyrizi's position across indications, especially in psoriasis.

Our next question comes from David Risinger with Leerink Partners.

Upon your vision for oncology, clearly, the company has compelling assets. But in light of an increasingly complex and competitive oncology landscape, could you just paint a picture of how you see your portfolio evolving and opportunities to acquire assets when it may be difficult to see what's around the corner from, let's say, an emerging oncology competitor in 3 to 4 years?

This is Tom Hudson. We've been -- we certainly -- when we talk about 400, we're also talking about going in different space than lung and breast, where there's a lot of competition, like colon cancer, gastric cancer, pancreas. So c-Met is a target that's expressed in many other tumors, and that's why we've developed this with topo warhead, so we can go to a broader set of tumors. And that's where we're seeing a very good data with ABBV-400 even unselected patient population, third line plus, we saw a 22% response versus 2% to 3%. What's also interesting about this is -- it's not just for colon cancer, but most chemos, most treatments and GI tumors have a lot of toxicity, a lot of diarrhea. And one of the things that excite the clinicians about this program is actually a very low rate of diarrhea. So what makes that not only can we see some efficacy in third line, but it sees we can move to earlier lines and combined with other therapies have higher efficacy. So there's a lot of unmet need in GI tumors. And so this data, again, we're going to have more data in our next cohort at the end of this year. In CRC will have different doses, and we'll also have potential cutoffs of biomarkers. So moving very well, but we're actually in a big space, in GI tumors, as I've mentioned, even our GARP program, also where we've shown the best data is in liver cancer, where c-Met is also expressed. We have opportunities to go explore places where there's a big unmet need and the competition is not the same. Now the other targets because we talked about topo platform. We have others, 706, which is already in the clinic with 6. Next year, we'll be going to 2 other indications, which for which there's less competition in terms of ADC space. So our strategy is actually to go and bring this in offering to a lot more cancer patients. I'll stop there, and I'll stop there.

It's Roopal. Let me add on a little bit. I think you may be also reflecting on some of the ESMO data that came out I will mention long a little bit, we still see an opportunity with Teliso-V. We're going to get data later this year. But what we've already observed is 50% ORRs in a biomarker-selected population in the EGFR wild type. If you look at some of the data that has come out, the ORRs are probably right around 20% to 30%. We don't have all the breakdown of all the different lung subtypes. But 1 approach is to use a biomarker and then select the patient population rather than going so broadly that was observed at ESMO. The other thing I would say reflecting on the data that came out, if you looked at EGFR mutants in lung, you see some higher levels of efficacy, either in the frontline or second line in that space. But that comes at a cost, and that's a chemo-like adverse event profile. And those are things like nausea, vomiting, stomatitis, alopecia, fatigue. These are things that you may see slight increases in efficacy, but clearly, patients don't want that. And like -- as Tom was mentioning with our platform and including Teliso-V, we have an opportunity there in the mutant side to combine with osimertinib, which has a nice profile. And those mutant patients when they progress, half of them have highly expressed c-Met. So that's where a combo looks good. And then we're also seeing 50% ORR in that segment as well. And we have a plan to get into Phase 3 into that next year. And then as we think about heme, we spoke about 383, which we feel has best-in-class potential. And one of the things that we're observing with that one is the high level of efficacy. [PRFs], we're driving down past grade 3 and now driving down to get past grade 2. So that enables the potential where you may not need hospitalization. And what you see now with the BCMA dual engagers is not just hospitalization but a REMS. And what we would add to that is dose spacing potentially every other month. So that one is a very nice profile, and we're moving into Phase 3 with that one, and we continue to conduct a variety of combinations there so we can move into earlier lines of therapy in multiple myeloma. We are still moving into earlier lines in Phase 3s with EPKINLY in heme, which is another dual engager. We have an asset called 453, which is our next-gen BCL2 blocker. And then we have a BTK degrader called 101 that's also in clinic. So quite a comprehensive approach across oncology.

Our next question comes from Geoff Meacham with Bank of America.

Just have a couple of quick ones, one on immunology. So you guys have evaluated the impact from Humira biosimilars beyond even 25%, is it your view that tail revenues are likely to be better than you initially modeled. And what, if anything, do Stelara, the delay in Stelara biosimilars impact this. And the second question, just on capital deployment. Just given your higher guidance, I know you guys just raised the dividend, but would you also say that the deal capacity is higher. I know you recently raised kind of M&A range and wondering if that's even going higher.

Yes. Geoff, it's Jeff here. And we continue to study the tail. I mean it's something that we're -- we look very closely at -- we continue to think that the Humira tail will emerge sometime in '25 or '26. And that's looking at some of the international analogs, how we think we see pricing may move I mean the one thing that we do believe is that you're not going to have a small molecule like tail, which is virtually nothing. There's going to be a sub-segment of patients that are going to stay on Humira. It's going to be modest, whether it's low price or low volume, but it will be there even in an interchangeable world. We don't necessarily believe that since we've outperformed here in volume in '23 that that's going to fundamentally change our view on the tail at this point. And again, we're still highlighting that. In terms of Stelara, obviously, we think in the U.S. that will not come until -- and I think it was recently confirmed this week until sometime in '25. And so overall, we think that's a modest net positive for AbbVie in terms of how that may play out. But that's not the primary driver of our strategy. Our primary driver of the strategy is how distinctive we are across our indications with Skyrizi versus Stelara, which I've already highlighted. So I hope that helps.

And Jeff, this is Rob. You're right. We did lift the cap. We had put that $2 billion BD cap in place, although we are rapidly paying down debt. And we lifted that at the beginning of this year because we essentially -- by the end of this year, we're going to have paid off all the incremental financing from the Allergan transaction. As Scott mentioned, our net leverage ratio is around 1.8x. And I have said previously that as long as we're going to pass back to 2x that leverage in 2 to 3 years, that's the way we're thinking about balance sheet capacity. So as we look at it, there's nothing from a balance capacity standpoint that would limit us today for pursuing the opportunities we'd be interested in. So that's not a limiting factor. And to the extent that we continue to raise guidance and perform more strongly. That just means there's even more capacity. But there's -- at this point, that's not a rate limiter for the types of opportunities we'd be interested in.

Our next question comes from Evan Seigerman with BMO Capital Markets.

Congrats on a progress. I just wanted to touch on the dividend growth. So at first line, it seems that your dividend growth, while impressive, is slowing a bit relative to other recent periods. Maybe you could help us understand kind of what's driving this dynamic at play? Is it concerns around near-term performance of key products you Humira erosion continuing next year? Or are you preserving capital for you to help further? Maybe some color on that would be very helpful.

So Evan, it's Rob. If you think about it, we're delivering dividend growth both in '23 and '24, while earnings are not growing, right? So then you look at the payout ratio we're at, we're going to be in the mid-50s. And we have said that over the long term, if you look at just across the industry as well, I'd say a good target is in, say, the mid- to high 40% payout ratio, which would mean that during this period where you see our payout ratio go up in the future, we're very committed to growing the dividend. We'll continue to grow the dividend, but we would expect then earnings would grow faster than dividend increases. So I would say we've gone through this period for a couple of years where we are still delivering a very nice dividend growth despite earnings declining. But given our commitment to that dividend, we're going to continue growing it. We'll likely see it step up from here, but not at the same rate as earnings growth because that payout ratio right now will be sitting in. So that's the way we think about it. Over the long term, we want to deliver a healthy, sustainable, growing dividend. And so we have a long view on this, and we are committed to delivering that growth to investors. And so that's the way we're thinking about it. We're going through a period of a couple of years here where earnings aren't growing. And then we see us return a robust growth, we'll step up that dividend again, but it's -- that's a dynamic that we're balancing here.

Our last question comes from [Jon Hung] with UBS.

I've got two. Just one confirmation on the trough and then one on aesthetics. So -- on the trough in '24, you mentioned that costs you will have the same margin in '24 is '23. So is it going to be a trough year on sales rather than the trough being driven by costs? And then second, again, just lots of noise on GLP-1s impacting aesthetics. You've commented before on fillers and Ozempic face in the past, but there's potential impact on body scope in -- is this actually anything that you're seeing coming through yet in the sales? And overall, is this trend a net positive or a net negative for you?

This is Rob. So clearly, we've communicated a floor for earnings. And Scott previously mentioned that I expect a similar level of operating margin year-over-year. And so you can model the sales accordingly. It should be fairly clear.

Operating margin profile.

Operating margin profile, yes. So we said the 46% to 47% is the way to think about operating margin profile in '23 and '24. We've given you the $11 EPS ex IPR&D as a floor for next year. So I was just using those parameters to model revenue. .

Carrie?

And this is Carrie. For your question around the weight loss products and the impact on the aesthetics business, I mean as we look at the long-term view of this market, we continue to think that anything that gets a subset of patients engaged in their appearance, which these weight loss products can do, that is a positive tailwind for our business. And we hear that from our customers and many of our customers are bringing these GLP-1s into their practice, and they see it as a natural opportunity to cross-sell. Now that said, in the short term, especially in an environment where discretionary spending is pressured and there could be trade-offs for higher-priced products such as fillers or body contouring. Now we're not necessarily seeing that as a driver. Right now, what we're seeing is the broader macroeconomic dynamics. But in the short term, that could be a trade-off in terms of share of wallet. But absolutely long term, this is something that is going to help patients get engaged in aesthetics and be an opportunity for cross-selling.

And 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. .

Thank you, and that concludes today's conference. You may all disconnect at this time.