Drugmakers see pain from reform and prices in 2011

Indústria farmacêuitca mundial enfrenta grandes desafios neste 2011!

É o que reporta a Reuters:  http://www.reuters.com!

Drugmakers see pain from reform and prices in 2011

By Kate Kelland and Katie Reid

LONDON/BASEL | Thu Jan 27, 2011 8:41am EST

LONDON/BASEL (Reuters) – Drugmakers AstraZeneca (AZN.L), Novartis (NOVN.VX), Eli Lilly (LLY.N) and Bristol-Myers Squibb (BMY.N) issued cautious 2011 forecasts, bracing the sector for challenging patent expiries and price pressures from U.S. health reforms.

While AstraZeneca cheered investors with above-forecast fourth-quarter earnings on Thursday and a surprise promise to buy back $4 billion of shares, it joined its Swiss rival in warning of pressure from generics, U.S. reforms and price cuts.

The earnings come after diversified healthcare group Johnson & Johnson (JNJ.N) kicked off the big pharma season by posting disappointing sales and cautioning it was facing growing pressure from governments and insurers to keep a lid on prices.

On Wednesday, Abbott Laboratories (ABT.N) forecast double-digit profit growth in 2011, but barely as much as Wall Street expects, and said it will cut 1,900 jobs over several years to offset costs of U.S. healthcare reforms.

“We’re quite bearish on the sector as a whole,” said Amit Roy, a pharmaceuticals analyst at Nomura in London.

Roy sees pressure increasing as new products being launched turn out to be little better than established or generic competitors.

“We see less commercial potential for many of the drugs being launched now,” Roy said. “They are not that differentiated from what is already out there.”

Novartis, the first European drugmaker to report in this earnings season, missed forecasts with a 10 percent drop in fourth-quarter core earnings per share and said it expected sales for 2011 to be lower.

Figures from both Astra and Novartis were dampened compared with 2010, when profits were boosted by windfall sales of H1N1 flu vaccines.

“If you look at what we’re facing in 2011, we have more headwinds than we did in 2010,” Novartis Chief Executive Joe Jimenez said. “We don’t have the benefit of H1N1 and we’ve got more cost containment coming from the U.S. as some of the healthcare reform costs kick in.”

Astra reckoned the impact of U.S. healthcare reform on sales would be close to $700 million in 2011, while Eli Lilly said the impact would lower 2011 revenue by $400 million to $500 million.

Lilly reported better-than-expected fourth-quarter sales and earnings, bolstered by favorable taxes and strong sales of its Cymbalta depression medicine. Its U.S. rival Bristol reported a disappointing quarterly profit and forecast roughly flat earnings this year, instead of the 3 percent growth Wall Street expected for the drugmaker.

Shares in Novartis were down 2.2 percent, while Astra’s buyback news and forecast boosted its stock by around 1.5 percent.

Bristol and Lilly shares were little changed in initial premarket trading.


Astra will face pricing pressure this year from key competitor brands losing exclusivity, such as Pfizer’s (PFE.N) Lipitor, which competes in the statin market with its blockbuster Crestor.

Sales of its Crestor cholesterol-lowering drug rose 24 percent in 2010 to $5.69 billion, across all regions.

“The coming years will be challenging for the industry and for the company as its revenue base transitions through a period of exclusivity losses and new product launches,” Astra said.

Astra said several setbacks, including the dropping of its lung drug hopeful motavizumab and heart medicine Certriad, and a delay to a U.S. decision on a license for its blood thinner Brilinta, had led it to cut expectations for future sales from pipeline drugs to $3 billion-$5 billion from $4 billion-$6 billion.

AstraZeneca Chief Financial Officer Simon Lowth said that impact would mean overall sales by 2014 were likely to be in the middle of its $28 billion-$34 billion forecast, rather than at the top end as it had previously hoped.

Novartis, which has had one of the most lucrative pipelines in the industry, said the uptake of multiple sclerosis pill Gilenya was in line with its expectations, recording sales of $13 million since its launch in October.

The group also said its newest products, such as its generic version of Sanofi-Aventis’ (SASY.PA) blood thinner Lovenox and cancer drug Tasigna, which Novartis is hoping will replace older blockbuster Glivec, performed well.

Lilly faces the U.S. patent expiry of its top-selling Zyprexa schizophrenia medicine later this year, while its No. 2 product, anti-depressant Cymbalta, faces generics in mid-2013.

The profit picture for Bristol-Myers will deteriorate in May 2012, when it and partner Sanofi-Aventis lose U.S. marketing exclusivity on their Plavix blood-clot preventer.

Bristol-Myers said it expects a profit in 2013 — the first full year Plavix will confront the generic onslaught — that may only be slightly higher than in 2009.

(Additional reporting by Ransdell Pierson and Lewis Krauskopf in New York, Paul Sandle in London, editing by Alexander Smith, Dave Zimmerman)


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