An 84.7% Gross Margin Before AmortisationWide moat

AbbVie (ABBV) — moat facet

AbbVie keeps about 85 cents of every revenue dollar after making its drugs, before charging the cost of buying them.

AbbVie's drugs earn extraordinary margins once made. The adjusted gross margin was 84.7% in the second quarter of 2026, against a GAAP gross margin of 74.7%1. The difference is mostly the amortisation of intangible assets bought with Allergan and other acquisitions, $1,689 million in the quarter2.

Margins, Q2 2026 (%)84.7%Adjusted gross74.7%GAAP gross48.3%Adjusted operatingAbbVie Q2 2026 results release
Very profitable drugs, expensively bought.

For the full year, cost of products sold was $18,204 million on revenue of $61,160 million in 20253, a GAAP gross margin of about 70.2%4. Amortisation of intangibles was $7,377 million5.

That gap is the price of AbbVie's strategy. It bought much of its current portfolio, and the purchase price is charged against earnings for years. Intangible assets, net, were $52,641 million at the end of 2025, down from $60,068 million a year earlier6, as the amortisation ran through.

The adjusted operating margin tells the same story at the next level: 48.3% in the second quarter of 20267, and management assumed about 48.5% for 20268.

The GAAP gross margin was much lower in 2023. Cost of products sold was $20,415 million on revenue of $54,318 million that year9, a GAAP gross margin of about 62.4%10, partly because of a $1.4 billion Imbruvica impairment charged to cost of products sold11. By 2025 the GAAP margin had recovered to about 70.2%12.

These margins are the fruit of the moat. The adjusted operating margin is the number to watch: a sustained fall below 45% would mean rebates, government prices or spending on acquired research are eroding the economics of the franchise.

Moat trajectory: Holding steady

Adjusted operating margin near 48%.

The number that tests this moat
Reported
Adjusted operating margin, latest quarter
48.3% (Q2 2026); about 48.5% assumed for 2026

The economics of the franchise; a fall below 45% would mean pricing or research costs are eroding it.

Source: AbbVie Q2 2026 results release ↗
⚠ Threats to the moat
⚠ THREAT 01
$7.4 Billion of Amortisation a Year
AbbVie charges about $7.4 billion a year against earnings for drugs it bought, and writes some of them down.
References
  1. ReportedThe adjusted gross margin was 84.7% in the second quarter of 2026, against a GAAP gross margin of 74.7%.
    AbbVie second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 31 July 2026 · source ↗
  2. ReportedThe difference is mostly the amortisation of intangible assets bought with Allergan and other acquisitions, $1,689 million in the quarter.
    AbbVie second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 31 July 2026 · source ↗
  3. ReportedFor the full year, cost of products sold was $18,204 million on revenue of $61,160 million in 2025, a GAAP gross margin of about 70.2%.
    AbbVie Form 10-K for fiscal 2025 - Item 1 business: products, customers, competition and research. — FY2025 · publ. 20 February 2026 · source ↗
  4. Moat Explorer calcFor the full year, cost of products sold was $18,204 million on revenue of $61,160 million in 2025, a GAAP gross margin of about 70.2%.
    Moat Explorer calculation from AbbVie's reported product revenue and financial statements ($ millions unless stated). Therapeutic areas 2025: immunology 17,562 + 8,304 + 4,540 = 30,406; neuroscience 3,621 + 3,769 + 1,271 + 1,036 + 482 + 381 + 207 = 10,767; oncology 2,869 + 2,792 + 690 + 271 + 33 = 6,655; aesthetics 2,602 + 993 + 1,265 = 4,860; eye care 493 + 410 + 197 + 1,009 = 2,109; other key products 1,317 + 1,512 + 907 = 3,736; all other 2,627; eye care and other products 2,109 + 3,736 + 2,627 = 8,472; total 61,160. 2024: immunology 11,718 + 5,971 + 8,993 = 26,682; neuroscience 8,999; oncology 6,555; aesthetics 5,176; eye care and other 2,242 + 3,648 + 3,032 = 8,922. 2023: 7,763 + 3,969 + 14,404 = 26,136; neuroscience 7,717; oncology 5,915; aesthetics 5,294; eye care and other 2,415 + 3,806 + 3,035 = 9,256. 2022: 5,165 + 2,522 + 21,237 = 28,924; neuroscience 6,528; oncology 6,577; aesthetics 5,333; eye care and other 2,701 + 3,854 + 4,137 = 10,692. Growth 2025: immunology 30,406 / 26,682 - 1 = 14.0%; neuroscience 10,767 / 8,999 - 1 = 19.6%. Immunology and neuroscience 30,406 + 10,767 = 41,173, 41,173 / 61,160 = 67.3%. Immunology share 30,406 / 61,160 = 49.7%. Skyrizi + Rinvoq: 5,165 + 2,522 = 7,687 (2022); 7,763 + 3,969 = 11,732 (2023); 11,718 + 5,971 = 17,689 (2024); 17,562 + 8,304 = 25,866 (2025); H1 2026 9,988 + 4,644 = 14,632; Q2 2026 5,505 + 2,525 = 8,030, 8,030 / 16,990 = 47.3%; 2026 plan 21.5 + 10.1 = 31.6 bn. Shares of revenue 7,687 / 58,054 = 13.2%; 11,732 / 54,318 = 21.6%; 17,689 / 56,334 = 31.4%; 25,866 / 61,160 = 42.3%. Humira: 4,540 / 21,237 - 1 = -78.6%; share 8,993 / 56,334 = 16.0% (2024), 4,540 / 61,160 = 7.4% (2025). Rebates: 65.1 / 61.16 = 1.06; 65.1 / 18.8 = 3.5 times (2019-2025) against net revenues 61,160 / 33,266 = 1.8 times; gross sales 61.2 + 65.1 = 126.3 bn, 126.3 / 61.2 = 2.1 times; managed care 22,307 / 61,160 = 36.5%; Medicaid and Medicare 21,283 / 61,160 = 34.8%; payers 22,307 + 21,283 = 43,590, 43,590 / 61,160 = 71.3%. Geography: US 46,603 / 61,160 = 76.2%; international 14,557 / 61,160 = 23.8%. Gross margin 2025 (61,160 - 18,204) / 61,160 = 70.2%. Government-set price products, 2025 sales: 2,869 + 3,621 + 907 + 3,769 = 11,166, 11,166 / 61,160 = 18.3%. Goodwill and intangibles 35,640 + 52,641 = 88,281, 88,281 / 133,960 = 65.9%. Eye care share 2,109 / 61,160 = 3.4%; aesthetics share 4,860 / 61,160 = 7.9%. Net debt 30 June 2026: 62,481 + 8,341 - 6,569 = 64,253; net debt / operating cash flow 64,253 / 19,030 = 3.4 years. Free cash flow 2025: 19,030 - 1,214 = 17,816; dividends paid 11,657 / 17,816 = 65.4%; operating cash flow / dividends 19,030 / 11,657 = 1.6; dividends declared / net earnings 11,819 / 4,226 = 2.8; dividends per share 6.65 / 1.75 = 3.8 times (2014-2025). Free cash flow yield 17,816 / 468,500 = 3.8%; free cash flow per share 17,816 / 1,771 = 10.06. 2026 adjusted EPS guidance midpoints: (14.37 + 14.57) / 2 = 14.47; (13.96 + 14.16) / 2 = 14.06; (14.08 + 14.28) / 2 = 14.18; (13.91 + 14.11) / 2 = 14.01; (13.87 + 14.07) / 2 = 13.97. Ubrelvy and Qulipta Q2 2026 392 + 350 = 742; 2025 1,271 + 1,036 = 2,307. Skyrizi share 17,562 / 61,160 = 28.7%. Juvederm 993 / 1,428 - 1 = -30.5%. Aesthetics 4,860 / 5,176 - 1 = -6.1%. Gross margin 2023 (54,318 - 20,415) / 54,318 = 62.4%. Skyrizi + Rinvoq 2021 2,939 + 1,651 = 4,590; 2022 7,687 / 21,237 = 36% - therapeutic-area totals, growth and rebates. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in AbbVie's Forms 10-K, 10-Q, results releases, the Q4 2025 call and market data; operands shown in the source line.
  5. ReportedAmortisation of intangibles was $7,377 million.
    AbbVie Form 10-K for fiscal 2025 - financial statements and notes: earnings, cash flow, balance sheet, acquisitions and contingent consideration. — FY2025 · publ. 20 February 2026 · source ↗
  6. ReportedIntangible assets, net, were $52,641 million at the end of 2025, down from $60,068 million a year earlier, as the amortisation ran through.
    AbbVie Form 10-K for fiscal 2025 - Item 1 business: products, customers, competition and research. — FY2025 · publ. 20 February 2026 · source ↗
  7. ReportedThe adjusted operating margin tells the same story at the next level: 48.3% in the second quarter of 2026, and management assumed about 48.5% for 2026.
    AbbVie second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 31 July 2026 · source ↗
  8. ReportedThe adjusted operating margin tells the same story at the next level: 48.3% in the second quarter of 2026, and management assumed about 48.5% for 2026.
    The Motley Fool, AbbVie Q4 2025 earnings call transcript - 2026 revenue assumptions by product and management's comments on share and competitors. — Q4 2025 · publ. 4 February 2026 · source ↗
  9. ReportedCost of products sold was $20,415 million on revenue of $54,318 million that year, a GAAP gross margin of about 62.4%, partly because of a $1.4 billion Imbruvica impairment charged to cost of products sold.
    AbbVie Form 10-K for fiscal 2025 - financial statements and notes: earnings, cash flow, balance sheet, acquisitions and contingent consideration. — FY2025 · publ. 20 February 2026 · source ↗
  10. Moat Explorer calcCost of products sold was $20,415 million on revenue of $54,318 million that year, a GAAP gross margin of about 62.4%, partly because of a $1.4 billion Imbruvica impairment charged to cost of products sold.
    Moat Explorer calculation from AbbVie's reported product revenue and financial statements ($ millions unless stated). Therapeutic areas 2025: immunology 17,562 + 8,304 + 4,540 = 30,406; neuroscience 3,621 + 3,769 + 1,271 + 1,036 + 482 + 381 + 207 = 10,767; oncology 2,869 + 2,792 + 690 + 271 + 33 = 6,655; aesthetics 2,602 + 993 + 1,265 = 4,860; eye care 493 + 410 + 197 + 1,009 = 2,109; other key products 1,317 + 1,512 + 907 = 3,736; all other 2,627; eye care and other products 2,109 + 3,736 + 2,627 = 8,472; total 61,160. 2024: immunology 11,718 + 5,971 + 8,993 = 26,682; neuroscience 8,999; oncology 6,555; aesthetics 5,176; eye care and other 2,242 + 3,648 + 3,032 = 8,922. 2023: 7,763 + 3,969 + 14,404 = 26,136; neuroscience 7,717; oncology 5,915; aesthetics 5,294; eye care and other 2,415 + 3,806 + 3,035 = 9,256. 2022: 5,165 + 2,522 + 21,237 = 28,924; neuroscience 6,528; oncology 6,577; aesthetics 5,333; eye care and other 2,701 + 3,854 + 4,137 = 10,692. Growth 2025: immunology 30,406 / 26,682 - 1 = 14.0%; neuroscience 10,767 / 8,999 - 1 = 19.6%. Immunology and neuroscience 30,406 + 10,767 = 41,173, 41,173 / 61,160 = 67.3%. Immunology share 30,406 / 61,160 = 49.7%. Skyrizi + Rinvoq: 5,165 + 2,522 = 7,687 (2022); 7,763 + 3,969 = 11,732 (2023); 11,718 + 5,971 = 17,689 (2024); 17,562 + 8,304 = 25,866 (2025); H1 2026 9,988 + 4,644 = 14,632; Q2 2026 5,505 + 2,525 = 8,030, 8,030 / 16,990 = 47.3%; 2026 plan 21.5 + 10.1 = 31.6 bn. Shares of revenue 7,687 / 58,054 = 13.2%; 11,732 / 54,318 = 21.6%; 17,689 / 56,334 = 31.4%; 25,866 / 61,160 = 42.3%. Humira: 4,540 / 21,237 - 1 = -78.6%; share 8,993 / 56,334 = 16.0% (2024), 4,540 / 61,160 = 7.4% (2025). Rebates: 65.1 / 61.16 = 1.06; 65.1 / 18.8 = 3.5 times (2019-2025) against net revenues 61,160 / 33,266 = 1.8 times; gross sales 61.2 + 65.1 = 126.3 bn, 126.3 / 61.2 = 2.1 times; managed care 22,307 / 61,160 = 36.5%; Medicaid and Medicare 21,283 / 61,160 = 34.8%; payers 22,307 + 21,283 = 43,590, 43,590 / 61,160 = 71.3%. Geography: US 46,603 / 61,160 = 76.2%; international 14,557 / 61,160 = 23.8%. Gross margin 2025 (61,160 - 18,204) / 61,160 = 70.2%. Government-set price products, 2025 sales: 2,869 + 3,621 + 907 + 3,769 = 11,166, 11,166 / 61,160 = 18.3%. Goodwill and intangibles 35,640 + 52,641 = 88,281, 88,281 / 133,960 = 65.9%. Eye care share 2,109 / 61,160 = 3.4%; aesthetics share 4,860 / 61,160 = 7.9%. Net debt 30 June 2026: 62,481 + 8,341 - 6,569 = 64,253; net debt / operating cash flow 64,253 / 19,030 = 3.4 years. Free cash flow 2025: 19,030 - 1,214 = 17,816; dividends paid 11,657 / 17,816 = 65.4%; operating cash flow / dividends 19,030 / 11,657 = 1.6; dividends declared / net earnings 11,819 / 4,226 = 2.8; dividends per share 6.65 / 1.75 = 3.8 times (2014-2025). Free cash flow yield 17,816 / 468,500 = 3.8%; free cash flow per share 17,816 / 1,771 = 10.06. 2026 adjusted EPS guidance midpoints: (14.37 + 14.57) / 2 = 14.47; (13.96 + 14.16) / 2 = 14.06; (14.08 + 14.28) / 2 = 14.18; (13.91 + 14.11) / 2 = 14.01; (13.87 + 14.07) / 2 = 13.97. Ubrelvy and Qulipta Q2 2026 392 + 350 = 742; 2025 1,271 + 1,036 = 2,307. Skyrizi share 17,562 / 61,160 = 28.7%. Juvederm 993 / 1,428 - 1 = -30.5%. Aesthetics 4,860 / 5,176 - 1 = -6.1%. Gross margin 2023 (54,318 - 20,415) / 54,318 = 62.4%. Skyrizi + Rinvoq 2021 2,939 + 1,651 = 4,590; 2022 7,687 / 21,237 = 36% - therapeutic-area totals, growth and rebates. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in AbbVie's Forms 10-K, 10-Q, results releases, the Q4 2025 call and market data; operands shown in the source line.
  11. ReportedCost of products sold was $20,415 million on revenue of $54,318 million that year, a GAAP gross margin of about 62.4%, partly because of a $1.4 billion Imbruvica impairment charged to cost of products sold.
    AbbVie Form 10-K for fiscal 2025 - financial statements and notes: earnings, cash flow, balance sheet, acquisitions and contingent consideration. — FY2025 · publ. 20 February 2026 · source ↗
  12. Moat Explorer calcBy 2025 the GAAP margin had recovered to about 70.2%.
    Moat Explorer calculation from AbbVie's reported product revenue and financial statements ($ millions unless stated). Therapeutic areas 2025: immunology 17,562 + 8,304 + 4,540 = 30,406; neuroscience 3,621 + 3,769 + 1,271 + 1,036 + 482 + 381 + 207 = 10,767; oncology 2,869 + 2,792 + 690 + 271 + 33 = 6,655; aesthetics 2,602 + 993 + 1,265 = 4,860; eye care 493 + 410 + 197 + 1,009 = 2,109; other key products 1,317 + 1,512 + 907 = 3,736; all other 2,627; eye care and other products 2,109 + 3,736 + 2,627 = 8,472; total 61,160. 2024: immunology 11,718 + 5,971 + 8,993 = 26,682; neuroscience 8,999; oncology 6,555; aesthetics 5,176; eye care and other 2,242 + 3,648 + 3,032 = 8,922. 2023: 7,763 + 3,969 + 14,404 = 26,136; neuroscience 7,717; oncology 5,915; aesthetics 5,294; eye care and other 2,415 + 3,806 + 3,035 = 9,256. 2022: 5,165 + 2,522 + 21,237 = 28,924; neuroscience 6,528; oncology 6,577; aesthetics 5,333; eye care and other 2,701 + 3,854 + 4,137 = 10,692. Growth 2025: immunology 30,406 / 26,682 - 1 = 14.0%; neuroscience 10,767 / 8,999 - 1 = 19.6%. Immunology and neuroscience 30,406 + 10,767 = 41,173, 41,173 / 61,160 = 67.3%. Immunology share 30,406 / 61,160 = 49.7%. Skyrizi + Rinvoq: 5,165 + 2,522 = 7,687 (2022); 7,763 + 3,969 = 11,732 (2023); 11,718 + 5,971 = 17,689 (2024); 17,562 + 8,304 = 25,866 (2025); H1 2026 9,988 + 4,644 = 14,632; Q2 2026 5,505 + 2,525 = 8,030, 8,030 / 16,990 = 47.3%; 2026 plan 21.5 + 10.1 = 31.6 bn. Shares of revenue 7,687 / 58,054 = 13.2%; 11,732 / 54,318 = 21.6%; 17,689 / 56,334 = 31.4%; 25,866 / 61,160 = 42.3%. Humira: 4,540 / 21,237 - 1 = -78.6%; share 8,993 / 56,334 = 16.0% (2024), 4,540 / 61,160 = 7.4% (2025). Rebates: 65.1 / 61.16 = 1.06; 65.1 / 18.8 = 3.5 times (2019-2025) against net revenues 61,160 / 33,266 = 1.8 times; gross sales 61.2 + 65.1 = 126.3 bn, 126.3 / 61.2 = 2.1 times; managed care 22,307 / 61,160 = 36.5%; Medicaid and Medicare 21,283 / 61,160 = 34.8%; payers 22,307 + 21,283 = 43,590, 43,590 / 61,160 = 71.3%. Geography: US 46,603 / 61,160 = 76.2%; international 14,557 / 61,160 = 23.8%. Gross margin 2025 (61,160 - 18,204) / 61,160 = 70.2%. Government-set price products, 2025 sales: 2,869 + 3,621 + 907 + 3,769 = 11,166, 11,166 / 61,160 = 18.3%. Goodwill and intangibles 35,640 + 52,641 = 88,281, 88,281 / 133,960 = 65.9%. Eye care share 2,109 / 61,160 = 3.4%; aesthetics share 4,860 / 61,160 = 7.9%. Net debt 30 June 2026: 62,481 + 8,341 - 6,569 = 64,253; net debt / operating cash flow 64,253 / 19,030 = 3.4 years. Free cash flow 2025: 19,030 - 1,214 = 17,816; dividends paid 11,657 / 17,816 = 65.4%; operating cash flow / dividends 19,030 / 11,657 = 1.6; dividends declared / net earnings 11,819 / 4,226 = 2.8; dividends per share 6.65 / 1.75 = 3.8 times (2014-2025). Free cash flow yield 17,816 / 468,500 = 3.8%; free cash flow per share 17,816 / 1,771 = 10.06. 2026 adjusted EPS guidance midpoints: (14.37 + 14.57) / 2 = 14.47; (13.96 + 14.16) / 2 = 14.06; (14.08 + 14.28) / 2 = 14.18; (13.91 + 14.11) / 2 = 14.01; (13.87 + 14.07) / 2 = 13.97. Ubrelvy and Qulipta Q2 2026 392 + 350 = 742; 2025 1,271 + 1,036 = 2,307. Skyrizi share 17,562 / 61,160 = 28.7%. Juvederm 993 / 1,428 - 1 = -30.5%. Aesthetics 4,860 / 5,176 - 1 = -6.1%. Gross margin 2023 (54,318 - 20,415) / 54,318 = 62.4%. Skyrizi + Rinvoq 2021 2,939 + 1,651 = 4,590; 2022 7,687 / 21,237 = 36% - therapeutic-area totals, growth and rebates. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in AbbVie's Forms 10-K, 10-Q, results releases, the Q4 2025 call and market data; operands shown in the source line.
Sources
Generated September 25, 2026