Pharma CEOs, including AbbVie's Richard Gonzalez, testify on Capitol Hill. Photo: Win McNamee/Getty Images

Humira is the world’s most profitable drug, but it’s also a prime example of Big Pharma's business model, as Sy Mukherjee lays out well in a big Fortune story.

The big picture: "These companies became like great big record labels: reliant on talent spotters going out and finding new artists," SVB Leerink analyst Geoffrey Porges tells Fortune.

Details: AbbVie, which now sells Humira, did not invent the drug. It bought the smaller biotech that did.

  • Once it owned Humira, AbbVie protected it with a thicket of patents — roughly 136 of them, and it has aggressively sued to protect those patents. It has also raised its list prices every year and spent big on marketing.
  • And now, with Humira competition inevitably approaching, AbbVie is buying Allergan, where it will benefit from the lucrative market for Botox and other cosmetic products.

Why it matters: This is increasingly how the industry works.

  • Small biotechs patented two-thirds of the novel drugs the FDA approved last year; Big Pharma companies only developed one-quarter of them.
  • Most Big Pharma companies are expected to reduce their research and development budgets.

The bottom line, per Mukherjee: "Hundreds of millions go to marketing and legal-fortress building, while innovation and scientific discovery — ostensibly the beating heart of the biopharmaceutical industry — is often imported from the outside."

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