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US pharma turning the corner

Pharma firms in the States see sales and profits up as they look to put a difficult year well and truly behind them

US pharmaceutical firms started a turnaround after a difficult year for the industry as strong fourth-quarter sales offset long-term worries about expiring patents and thinning pipelines.

Eli Lilly, which has launched nine new drugs in the last four years, reported better than expected Q4 profits, as newer drugs in its portfolio, such as antidepressant Cymbalta and impotence drug Cialis, helped reduce the effect of falling sales of its top-selling schizophrenia treatment, Zyprexa.

Fourth-quarter sales rose 6 per cent to $3.88bn, while net income rose to $700.6m, or 64 cents a share, from a net loss of $2.4m a year earlier. The 2004 fourth-quarter net loss was mainly due to the tax expense on the repatriation of overseas earnings as well as restructuring.

ìI like the lack of patent expirations,î said analyst Chris Schott at Banc of America Securities. ì[Lilly] have a portfolio of new products.î

Schering-Plough (S-P) also managed to turn a corner, registering a fourth-quarter net income of $126m, compared with a loss of $834m a year earlier, reflecting a tax provision primarily for repatriating foreign profits.

Revenue rose 6.4 per cent to $2.32bn from $2.18bn last year, driven by sales growth of prescription drugs such as Remicade, Peg-Intron, Nasonex and Temodar. S-P's cholesterol treatment, Vytorin, which combines its drug Zetia with Merck's Zocor, is not counted in the firm's sales because of accounting rules; the two companies share the profits from the drug.

ì2005 was a pivotal year for Schering-Plough,î said chairman and chief executive Fred Hassan. ìWe began our turnaround phase. We achieved our goal of growing revenues and earnings.î

Merck, which said it had reserved $295m more for its legal defence over withdrawn painkiller Vioxx, reported a 1.7 per cent increase in fourth-quarter profit to $1.12bn, up from $1.10bn a year earlier.

Total revenue edged up to $5.77bn from $5.75bn, despite an 18 per cent decrease in sales of the firm's cholesterol drug Zocor. Fourth-quarter sales of Zocor still amounted to $1.1bn, with the drug set to lose patent protection later in the year.

Wyeth reported fourth quarter net income of $731.7m, compared with a net loss of $1.76bn a year earlier, when the firm absorbed a charge of $4.5bn as a result of litigation related to diet drugs Redux and Pondimin.

Higher sales of rheumatoid arthritis drug Enbrel and pneumonia vaccine Prevnar boosted overall sales, although fourth-quarter sales of antidepressant Effexor dipped 1 per cent compared to the same period a year earlier, to $841m, reflecting a slowdown in the overall antidepressant drugs market after concerns about their safety, particularly in children.

Global pharmaceutical sales at Abbott Laboratories cruised to $6.05bn from $5.65bn, on the back of growing sales of its rheumatoid arthritis drug, Humira. Full-year Humira sales were up 64 per cent at $1.4bn, topping Abbott's forecasts.

The firm, which has enjoyed relatively few patent expiries of late, posted net income of $976.4m, or 63 cents a share, compared with $974.6m, or 62 cents a share, a year earlier.

New York-based Bristol-Myers Squibb (BMS) bucked the trend as its sales slid 2.7 per cent to $5.02bn from $5.16bn, despite solid growth from newer drugs such as antipsychotic Abilify and Reyataz for HIV. Sales of older drugs such as cholesterol treatment Pravachol (which loses patent protection in April) and cancer drug Taxol continued to slip, under competition from rival drugs.

However BMS's profits still managed to surge. The firm posted a net income of $499m, or 26 cents a share, compared with $139 million a year earlier, when it suffered a $575m charge to repatriate foreign earnings.

The world's largest biotech firm, Amgen, reported strong Q4 earnings but warned its growth will slow over the next year as it invests more in R&D spending.

Strong sales of key drugs for treating anaemia and chemotherapy-related infection drove net income up 20 per cent in the quarter to $824m, or 66 cents a share, up from $689m, or 53 cents a share, a year earlier. Revenue was up 12 per cent to $3.27bn.

Amgen said it planned to boost R&D spending substantially, by $700m to $900 in the current year. Much of this spending will fund late-stage clinical trials on a number of promising drugs, including an osteoporosis drug called denosumab and cancer drugs, panitumumab and AMG 706.

Chief executive Kevin Sharer said that the expansion of R&D spending reflects the company's renewed confidence in its pipeline.

30th September 2008

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