Which Pharma Company Performed Better- AbbVie (NYSE:ABBV) Or Zoetis (NYSE:ZTS)

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By Joseph Carducci on December 18, 2014 BioPharma

It has been almost 2 years since AbbVie (NYSE:ABBV) and Zoetis (NYSE:ZTS) got separated from Abbot Labs (NYSE:ABT) and Pfizer (NYSE:PFE) respectively. And so it seems like a perfect time to make a comparison between the performances of both these companies. In order to compare the progress of AbbVie and Zoetis, let’s have a look at some of the performance metrics.

AbbVie (NYSE:ABBV) is clearly the winner when it comes to returns, for the stock price of AbbVie is much higher than Zoetis. AbbVie saw an increase of around 98 percent in its stock prices since the time it went public.

Coming to the dividend yield of both these companies, AbbVie (NYSE:ABBV) is again the winner. The dividend yield of AbbVie has been recorded to be around 3 percent whereas the yield of Zoetis (NYSE:ZTS) currently stand at 0.7 percent. Both the firms raised their dividends since the time they went public. Zoetis raised the numbers by 11 percent whereas AbbVie improved the yield by 5 percent.

It is important that the dividends remain sustainable. In the category of sustainability, AbbVie (NYSE:ABBV) is quite ahead of Zoetis (NYSE:ZTS). AbbVie used 54 percent of its free cash flow in the year 2014 to pay off the dividends whereas Zoetis (NYSE:ZTS) had to consume all of its cash flow to deliver the promised dividends.

AbbVie (NYSE:ABBV) was planning on buying Shire (NASDAQ:SHPG): however, it had to abandon that plan when the United States took away the tax inversion’s benefits. Since then, the company has been looking for some other venture to invest its assets in.

Zoetis (NYSE:ZTS), on the contrary, is likely to be bought by Bayer AG. The company is a big name in the animal health segment, and if a larger company buys it, chances are that the new company will be the largest in this segment, thus, eliminating all the competition by taking away a large portion of the market share.

Although the buyout of Zoetis (NYSE:ZTS) is just a rumor, the investors are eager to know the stance of the company if such a situation arises, for, sometimes, the buyouts derive the share price upwards.

Where AbbVie (NYSE:ABBV) is the winner in many metrics, Zoetis (NYSE:ZTS) is surely the victor when it comes to stability. AbbVie’s anti-inflammatory medicine, Humira, was responsible for making up around 63 percent of the company’s net sales for the first 9 months of the year 2014. However, the sales are likely to drop by big margins because a copycat drug, Biosimilar, is coming in the market. Zoetis, on the other hand, makes its profits from 300 different drugs, and hence, the chances that its profits will fall if the company sees a competition in any one of its drugs are quite low.

Coming to the market capitalization of AbbVie (NYSE:ABBV), the figures currently stand at $106.06 billion. The market capitalization of Zoetis (NYSE:ZTS) is much lower than that of AbbVie (NYSE:ABBV): the figures have been recorded to be around $20.62 billion.