Pharma 4Q Earnings Roundup: Eli Lilly, Pfizer, Bristol-Myers Hurt By Generics; Merck Ahead

 @moranzhang on January 29 2013 2:21 PM
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Drugmakers are hoping that their newer drugs could help offset the revenue lost from former top-sellers. Reuters

Patent expirations for lucrative blockbuster drugs eroded fourth-quarter sales for top drugmakers Pfizer Inc. (NYSE:PFE), Eli Lilly & Co. (NYSE:LLY) and Bristol-Myers Squibb Co. (NYSE:BMY) as they faced competition from low-cost generic drugs. Big pharmaceutical companies have been cutting costs and working to bring new products to market to soften the hit from patent expirations.

Merck & Co. (NYSE:MRK) is set to report earnings for the past quarter on Friday and could report similar results.

Sales at Pfizer, Eli Lilly and Bristol-Myers all slipped last quarter as they continued to grapple with a steep industry-wide patent cliff.

Cholesterol fighter Lipitor, which once brought in as much as $13 billion annually for Pfizer, got U.S. generic competition in December 2011 and now has generic rivals in many major markets. In the fourth quarter, Lipitor sales plunged 91 percent in the U.S. and 71 percent worldwide, to only $584 million. But that was offset by strong sales of other medicines. Some key newer drugs had double-digit sales increases, including fibromyalgia and pain treatment Lyrica and painkiller Celebrex.

Eli Lilly's former best-seller, the antipsychotic Zyprexa, lost U.S. patent protection in the fall of 2011. Sales for Zyprexa once topped $5 billion annually, but they dropped steeply throughout last year and fell 49 percent to $384.8 million in the last three months of 2012.

While revenue from Eli Lilly’s new best-seller, the antidepressant Cymbalta, climbed 20 percent in the fourth quarter to $1.42 billion, the company will lose U.S. patent protection for it in December. Besides the looming threat from Cymbalta generics, the firm will also lose exclusivity for its $1 billion-a-year Evista osteoporosis drug in early 2014.

Hoping to cushion the blow from generics, Eli Lilly said it currently has 13 experimental drugs now in late-stage trials, which could yield new products in coming years.

Demand for Bristol-Myers' blood clot preventer, Plavix, which had been one of the world’s best-selling drugs until its U.S. patent lapsed last May, almost disappeared in the fourth quarter -- falling 97 percent to $49 million. Blood pressure drugs Avapro and Avalide, which lost patent protection last March, dropped 57 percent to $84 million.

Again, a half-dozen newer drugs helped offset the steep decline. Sales of arthritis treatment Orencia rose 26 percent to $325 million, leukemia treatment Sprycel rose 24 percent to $281 million, and combined revenue from diabetes drugs Onglyza and Kombiglyze grew 29 percent to $198 million. Sales of Yervoy, a new treatment for melanoma, rose 47 percent to $211 million.

Singulair, Merck's best-selling drug, which treats asthma and allergies, lost U.S. patent protection last August. Sales of the branded drug tumbled 55 percent to $602 million for the third quarter. The drug is due to lose patent protection in major European countries next month.

2012 Fourth-Quarter And Full-Year Earnings Results:

Pfizer. The New York-based company reported a jump in fourth-quarter profit, as it recorded a gain from selling its nutritional products business to Swiss food group Nestle SA (VTX:NESN) for about $12 billion in November. Net income at the world’s largest drug company by revenues was $6.3 billion, or 85 cents a share, compared with $1.4 billion, or 19 cents, in the same period a year ago.

Excluding one-time items, Pfizer would have had a profit of $3.51 billion, or 47 cents a share, in the quarter. Analysts, on average, expected 44 cents a share, according to Thomson Reuters. Revenue fell 7 percent to $15.1 billion but came in well above expectations of $14.35 billion.

For the full year, net income was $14.57 billion, or $1.94 a share. That was up from $10.01 billion, or $1.27 a share, in 2011. Revenue totaled $58.99 billion, down 10 percent from $65.26 billion in 2011, before generic competition slashed sales of blockbuster drugs.

Eli Lilly. For the fourth quarter, the Indianapolis-based company said it earned $827 million, or 74 cents a share, down from $858 million, or 77 cents a share, a year earlier.

Excluding special items, Eli Lilly earned 85 cents a share, beating analysts' expectations by 7 cents a share. The better-than-expected results were due to cost controls and strong sales of other key drugs.

Revenue dropped 1 percent to $5.96 billion but was above Wall Street expectations of $5.81 billion.

For the full year, net income and earnings decreased 6 percent to $4.09 billion and $3.66 a share, respectively, compared with full-year 2011 net income of $4.35 billion and earnings a share of $3.90. Total revenue declined 7 percent to $22.6 billion from $24.29 billion in 2011. Analysts were looking for full-year 2012 revenue of $22.43 billion.

Bristol-Myers. New York-based Bristol-Myers said it earned $925 million, or 56 cents a share, in the fourth quarter. That's compared with $852 million, or 50 cents per share, in the year-earlier quarter.

Excluding special items, such as a $411 million tax benefit from the write-off of a failed hepatitis C drug, the company earned 47 cents a share -- higher than analysts' average forecast of 43 cents.

Revenue plunged 23 percent to $4.19 billion in the fourth quarter from a year earlier to $4.19 billion. Wall Street had expected $4.12 billion.

Merck. The Whitehouse Station, N.J.-based Merck is expected to report fourth-quarter earnings per share of 81 cents on revenue of $11.47 billion, compared with 97 cents a share on revenue of $12.29 billion in the year-ago period. The analysts' consensus full-year forecast calls for $3.80 a share earnings on revenue of $47 billion. That compares with $3.77 a share and $48.05 billion in 2011.

Merck shares rose 66 cents to $43.60 in Tuesday trading. Pfizer shares were up 85 cents to $27.69, Bristol Myers shares rose 17 cents to $36.58 and Eli Lilly shares added $2.09 to $54.73.

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