Why AbbVie Stock Cruised to an Almost 6% Gain Today

Key Points

• It's about to significantly expand its biologics research and manufacturing effort at a facility in Massachusetts.

• This should cost it a cool $70 million.

• 10 stocks we like better than AbbVie ›

The announcement of a new buildout, as well as developments on the political front, were the factors driving up AbbVie (NYSE: ABBV) stock on Wednesday. The pharmaceutical company's shares rose by nearly 6% in value as a result, during a session when the S&P 500 (SNPINDEX: ^GSPC) crept up a comparatively modest 0.3%.

Getting out the shovels

On Tuesday afternoon, AbbVie reported that it had begun construction on a $70 million expansion of its AbbVie Bioresearch Center (ABC) in the Massachusetts city of Worcester. The project is aimed at bolstering both research and development (R&D) of investigational medicines and manufacturing, specifically of biologics.

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The buildout will see an expansion of existing manufacturing spaces, in addition to the construction of a three-story building to house warehouse, office, and laboratory facilities.

Dovetailing with the Trump administration's goal of locating more corporate assets such as factories in this country, AbbVie said that this is part of a $10 billion-plus aim to support the advancement of biologics.

The company quoted COO Azita Saleki-Gerhardt as saying that the project will also "build upon its impressive track record of developing, manufacturing, and launching next-generation complex biologic medicines."

A deal with Trump

AbbVie also benefited from the latest moves of a major peer in the pharmaceutical realm. On Tuesday, Pfizer CEO Albert Bourla formally agreed to lower the prices of a clutch of its drugs, apparently for the Medicaid program. His company will also get a break from the pharmaceutical industry tariffs planned by the Trump administration, as Pfizer has pledged to invest more in the U.S.

If Pfizer can do it, so can AbbVie. It seems the two major threats hanging over the pharmaceutical industry -- pricing and tariffs -- might not be as scary as they first appeared.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Pfizer. The Motley Fool has a disclosure policy.