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Q4 Biopharma Themes: Strong 2018, Weaker 2019 Earnings Projections, Concerns Over Drug Pricing

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Many of the big biopharma companies reported fourth-quarter and year-end earnings this week. If there’s a theme among them, it seems lower earnings per share are forecast for the year. The reasons vary, but some cite concerns about government intervention in drug pricing creating uncertainty. Let’s look at some of the highlights.

Pfizer reported revenues of $53.6 billion for the full year, which was 2 percent operational growth. The fourth quarter brought in $14 billion, which was 5 percent operational growth.

But what appears to be getting attention is the company’s weaker forecast for 2019, projecting adjusted earnings per share of $2.82 to $2.92, below the average Wall Street analyst estimate of $3.04. The company is citing unfavorable foreign-exchange effects, which will decrease sales by about $900 million this year. The area where Pfizer is booming is in the overseas markets. Its oncology segment climbed 53 percent overseas, while the oncology sales in the U.S. only improved 6 percent.

Bloomberg noted, “This outlook echoed guidance issued earlier this month by health-care bellwether Johnson & Johnson, one of Pfizer’s largest rivals. J&J said it expects growth to slow or grind to a halt this year as the dollar climbs against rival currencies and rising drug prices become a more central political issue in Washington.”

J&J’s 2019 sales guidance at the midpoint is $80.8 billion, compared to Wall Street estimates of $82.6 billion. Of particular concern for J&J is that net prices for its products in the U.S. market dropped between 6 and 8 percent last year, although for 2019 the company expects net price decreases to stay at “elevated levels” this year.

AbbVie reported a loss of $1.83 billion for the fourth quarter of 2018. Overall revenues were up for the full year, however, hitting $32.75 billion compared to $28.2 billion in 2017.

Quarterly results, however, failed to meet Wall Street expectations. On a per-share basis for the fourth quarter, AbbVie had a loss of $1.23, earnings per share were $1.90. An average estimate by seven analysts had projected earnings of $1.92 per share. In the same period, AbbVie cited revenue of $8.31 billion for the quarter. A survey of four analysts had projected $8.36 billion.

“We delivered exceptional performance in 2018, including operational revenue growth of more than 15 percent and EPS growth above 40 percent,” stated AbbVie chairman and chief executive officer, Richard A. Gonzalez. “We’re entering an important new phase for AbbVie. The continued momentum of our business, combined with the launch and ramp of several new products, will allow us to drive strong earnings growth once again in 2019 and position us for growth over the longer term.”

Amgen reported revenue increases of 7 percent for the fourth quarter to $6.2 billion. Product sales grew 8 percent globally, with new product launches including Repatha, Prolia, Kyprolis and Xgeva showing double-digit growth. Total revenue for the year increased 4 percent to $23.7 billion.

GAAP EPS increased $3.01 in the fourth quarter and to $12.62 for the full year, driven by higher overall revenues, a lower tax rate from the U.S. government, and lower weighted-average shares outstanding. For the quarter, operating incoming was up 6 percent.

EPS guidance for 2019 was $11.55 to $12.75 on a GAAP basis and $13.10-$14.30 on a non-GAAP basis.

“Through our continued solid operating performance in 2018, we met and exceeded our long-term financial commitments,” stated chairman and chief executive officer, Robert A. Bradway.

Merck & Co. reported $11 billion global fourth-quarter sales, an increase of 5 percent. Year-end sales were $42.3 billion, also 5 percent. Pharma sales for the quarter hit $9.8 billion, up 5 percent, driven by its oncology and vaccines portfolio, driven, not surprisingly, by its checkpoint inhibitor Keytruda.

For 2019, the company projects worldwide sales of $43.2 billion to $44.7 billion. GAAP EPS were $0.69 for the quarter and $2.32 for the full year. The company projects its full-year 2019 GAAP EPS to be $3.97 to $4.12.

“Last year was a strong one for Merck marked by substantial progress on scientific and commercial fronts,” stated Kenneth C. Frazier, Merck’s chairman and chief executive officer.”

Novo Nordisk announced operating profit dropped by 4 percent in Danish kroner and increased by 3 percent in local currencies, impacted by the depreciation of the U.S. dollar and related currencies. For 2019, sales growth is projected to be 2 to 5 percent in local currencies. “This includes the previously communicated negative impact from the changes in the funding of the Medicare Part D coverage by approximately DKK 2 billion,” the company stated.

Lars Fruergaard Jorgensen, president and chief executive officer of Novo Nordisk, stated, “2018 was a year of change and significant progress for Novo Nordisk. We delivered on our targets for sales and operating profit and have successfully launched Ozempic, our new once-weekly GLP-1 for people with type 2 diabetes, in several countries.”

The company also said it expected continued pricing pressure in the diabetes market, particularly in the U.S.

Takeda announced its third-quarter FY2018 results today. It reported 4.8 percent revenue year-to-date growth in its prescription drug portfolio in all regions, particularly its growth drivers, gastroenterology, oncology, neuroscience and emerging markets. These segments grew 10.5 percent. The U.S. market grew by 8.5 percent, Japan by 4.9 percent, European and Canada by 4.9 percent and emerging markets by 5.1 percent.

Underlying Core Earnings grew 32.3 percent year-to-date with margin expansion of 530 basis points.

“Takeda’s strategic focus and superior execution continue to drive robust performance through the first three-quarters of FY2018,” stated Costa Saroukos, Takeda’s chief financial officer. “In addition to strong commercial execution, we have continued to deliver on our commitment to margin expansion, with the Underlying Core Earnings margin increased by 530 basis points driven by our Global Opex Initiative. In addition to delivering compelling financial results, we also closed the Shire acquisition on January 8…. Integration of the two companies is now progressing as planned, and this is an exciting time for Takeda as we become a truly global, values-based, R&D driven biopharmaceutical leader.”

 

Πηγή

Thanasis Chalikias Προβολή όλων

A Product Manager with expertise in pharma marketing and sales operations

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