The Skyrizi Royalty: A $25 Billion LiabilityNarrow moat

AbbVie (ABBV) — moat facet

A royalty tied to Skyrizi is a $25 billion liability on AbbVie's balance sheet, and every good Skyrizi quarter makes it bigger.

Skyrizi's success carries a cost that does not appear in its sales figures. AbbVie records contingent consideration liabilities, largely a royalty on Skyrizi owed from an earlier acquisition, of $25,374 million at the end of 20251. In 2025 the change in their fair value reflected higher estimated Skyrizi sales, the passage of time, lower discount rates and a longer estimated royalty period2.

Contingent consideration ($M)5,128Fair value change 20233,771Fair value change 20246,495Fair value change 202525,374Liability end-2025AbbVie Form 10-K FY2025
A liability that grows with the drug.

The charge goes through the income statement. The change in fair value of contingent consideration was $6,495 million in 2025, $3,771 million in 2024 and $5,128 million in 20233, and AbbVie paid $2,865 million of contingent consideration in cash in 20254. In the second quarter of 2026 the change was $1,518 million5.

That explains much of the gap between AbbVie's reported and adjusted earnings. Diluted earnings per share were $2.36 in 2025 on a GAAP basis and $10.00 on an adjusted basis67, and the royalty is one of the largest items in between, alongside $7,377 million of intangible amortisation8.

Economically, the royalty is a share of Skyrizi's profits that AbbVie does not keep. The drug's margin to AbbVie is lower than its sales suggest, and that cost rises with success.

The cash payments have been rising with the drug. Contingent consideration paid in operating cash flow was $870 million in 2023, $1,995 million in 2024 and $2,865 million in 20259. As long as Skyrizi grows, the payments will too, and they will reduce the drug's value to AbbVie by a growing amount each year until the royalty period ends.

The royalty is real cash. The number that measures it is contingent consideration paid, $2,865 million in 202510; it will rise as long as Skyrizi grows, and it will end only when the royalty period does.

Moat trajectory: Holding steady

The liability rises with Skyrizi's success; cash payments are growing.

The number that tests this moat
Reported
Contingent consideration paid in cash
$2,865M (2025); $1,995M in 2024

The part of Skyrizi's success paid away; rising faster than Skyrizi sales would mean the royalty is taking a growing share.

Source: AbbVie Form 10-K, FY2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
Success Is Charged Against Earnings
When Skyrizi's forecast improves, AbbVie reports a loss on the royalty it owes, so its GAAP earnings move against its best drug.
References
  1. ReportedAbbVie records contingent consideration liabilities, largely a royalty on Skyrizi owed from an earlier acquisition, of $25,374 million at the end of 2025.
    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 ↗
  2. ReportedIn 2025 the change in their fair value reflected higher estimated Skyrizi sales, the passage of time, lower discount rates and a longer estimated royalty period.
    AbbVie Form 10-K for fiscal 2025 - Item 7 MD&A: net revenues by product and region, and rebates. — FY2025 · publ. 20 February 2026 · source ↗
  3. ReportedThe change in fair value of contingent consideration was $6,495 million in 2025, $3,771 million in 2024 and $5,128 million in 2023, and AbbVie paid $2,865 million of contingent consideration in cash in 2025.
    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 ↗
  4. ReportedThe change in fair value of contingent consideration was $6,495 million in 2025, $3,771 million in 2024 and $5,128 million in 2023, and AbbVie paid $2,865 million of contingent consideration in cash in 2025.
    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 ↗
  5. ReportedIn the second quarter of 2026 the change was $1,518 million.
    AbbVie second-quarter 2026 results release, Form 8-K exhibit 99.1. — Q2 2026 · publ. 31 July 2026 · source ↗
  6. ReportedDiluted earnings per share were $2.36 in 2025 on a GAAP basis and $10.00 on an adjusted basis, and the royalty is one of the largest items in between, alongside $7,377 million of intangible amortisation.
    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 ↗
  7. ReportedDiluted earnings per share were $2.36 in 2025 on a GAAP basis and $10.00 on an adjusted basis, and the royalty is one of the largest items in between, alongside $7,377 million of intangible amortisation.
    AbbVie fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - adjusted EPS and 2026 guidance. — FY2025 · publ. 4 February 2026 · source ↗
  8. ReportedDiluted earnings per share were $2.36 in 2025 on a GAAP basis and $10.00 on an adjusted basis, and the royalty is one of the largest items in between, alongside $7,377 million of intangible amortisation.
    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 ↗
  9. ReportedContingent consideration paid in operating cash flow was $870 million in 2023, $1,995 million in 2024 and $2,865 million in 2025.
    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. ReportedThe number that measures it is contingent consideration paid, $2,865 million in 2025; it will rise as long as Skyrizi grows, and it will end only when the royalty period does.
    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 ↗
Sources
Generated September 25, 2026