Aging Populations And Healthcare Cost Pressures Will Drive Biosimilar Expansion

Key Takeaways

• Aggressive global expansion, strong pipeline, and operational efficiency position Alvotech for sustained margin outperformance and rapid revenue growth ahead of market expectations.
  
• Widening shareholder base, cross-listings, and supportive policy environment amplify upside in demand, liquidity, and long-term sales potential.
  
• Heavy dependence on a narrow biosimilar pipeline, competitive pricing, and tight partnerships heightens profit risks amid regulatory, financial, and global market uncertainties.

Catalysts

Through its subsidiaries, develops and manufactures biosimilar medicines for patients worldwide.

• Analyst consensus is constructive on global expansion and share gains in Humira and STELARA biosimilars, but the current data significantly understates both the scale and speed of uptake, as Alvotech already commands the second-largest Humira biosimilar share in the U.S., has accelerated roll-outs in 33 markets, and is poised to benefit from outsized growth in low-penetration geographies like France, likely driving product revenues and margin outperformance versus expectations.
  
• While consensus highlights near-term regulatory decisions and launches, the pipeline's breadth-bolstered by acquisitions (Xbrane R&D, Cimzia rights, Ivers-Lee)-positions Alvotech for multi-year step-changes in revenue as a first-mover in multiple blockbuster markets, with milestone payments and post-approval commercialization offering sharp potential upside to both licensing income and long-term sales, far beyond typically modeled trajectories.
  
• Recent rapid positive cash flow improvements and five consecutive quarters of positive adjusted EBITDA point to a self-reinforcing cycle: operational scale is already unlocking cost efficiencies and production leverage well ahead of industry norms, which can translate into sustained net margin expansion and accelerating free cash generation as portfolio breadth grows.
  
• Increasing institutional float and cross-listings (U.S., Iceland, Stockholm) are broadening the global shareholder base and improving liquidity, setting the stage for increased investor demand and potential re-rating of the equity, especially as solid operational performance continues to reduce risk premia and cost of capital.
  
• Heightened global urgency to rein in healthcare costs-combined with governments actively prioritizing biosimilar adoption-could produce a stronger-than-expected, policy-led tailwind that not only accelerates product uptake, but may also create conditions for premium pricing and favorable margin dynamics for cost-competitive, quality-first suppliers like Alvotech.

Alvotech Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Alvotech compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Alvotech's revenue will grow by 43.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 11.3% today to 38.7% in 3 years time.
• The bullish analysts expect earnings to reach $643.0 million (and earnings per share of $2.85) by about August 2028, up from $63.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 20.4x on those 2028 earnings, down from 40.1x today. This future PE is greater than the current PE for the US Biotechs industry at 15.3x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.01%, as per the Simply Wall St company report.

Alvotech Future Earnings Per Share Growth

Risks

• Intensifying competition in both the Humira and STELARA biosimilar markets, with management acknowledging very competitive pricing where competitors are offering discounts that may not be sustainable, could place downward pressure on Alvotech's product prices and compress future profit margins.
  
• The company remains heavily reliant on a limited pipeline of monoclonal antibody biosimilars, meaning that regulatory delays or setbacks for key assets-such as FDA inspection-related approval timing, which the team acknowledged as an ongoing process-could materially impact revenue growth and increase volatility in earnings.
  
• Alvotech's business model is dependent on substantial commercial partnerships (including Teva, STADA, and others) for market access and launches; any changes in those relationships or unfavorable revenue-sharing terms could limit organic top-line growth and reduce net margins over time.
  
• The company has a high debt load, reporting $1,139 million in debt against $151 million in cash, and an ongoing need for capital-intensive R&D investments (including recent acquisitions in Sweden and Switzerland) that could result in negative cash flows and delay sustained profitability.
  
• Macroeconomic volatility, persistent government cost-containment efforts, and increasing regulatory scrutiny on pricing and manufacturing are likely to drive unpredictable shifts in healthcare budgets and policy regimes, which may constrain Alvotech's future international sales expansion and add compliance costs that erode earnings.

Valuation

• The assumed bullish price target for Alvotech is $28.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Alvotech's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $28.0, and the most bearish reporting a price target of just $14.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $1.7 billion, earnings will come to $643.0 million, and it would be trading on a PE ratio of 20.4x, assuming you use a discount rate of 7.0%.
  
• Given the current share price of $8.12, the bullish analyst price target of $28.0 is 71.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.