Top U.S. drugmakers ride new products to strong results

Print 30 October 2015
Bill Berkrot / Reuters

Oct 27 (Reuters) - Growing sales of expensive new cancer drugs and other newer medicines propelled top U.S. drugmakers Pfizer Inc, Merck & Co and Bristol-Myers Squibb Co to stronger-than-expected third-quarter profits.

The results, announced on Tuesday, demonstrate that the "patent cliff" that had been hurting earnings as huge-selling drugs like Pfizer's Lipitor and Bristol's Plavix went generic is now well behind these companies.

Shares of all three rose as they also modestly raised their full-year forecasts.

Merck's Keytruda and Bristol-Myers' Opdivo, both immunotherapies for advanced melanoma and lung cancer, and Pfizer's Ibrance for breast cancer are off to strong starts, with Wall Street forecasting eventual multibillion-dollar sales. Keytruda and Opdivo list for about $150,000 for a year of treatment, and Ibrance goes for about $118,000.

In addition, blood clot and stroke preventer Eliquis, which Pfizer and Bristol share, has begun to take off and is on track for annual sales of nearly $2 billion.

"This is the best innovation-based new product cycle in these companies' storied histories," said Suntrust Robinson Humphrey analyst John Boris. "Eliquis is just knocking the cover off the ball."

Merck and Bristol are testing their new immuno-oncology drugs in numerous combinations and in dozens of different types of cancer.

Pfizer said it expected to introduce a drug from the same PD-1 class as Opdivo and Keytruda in 2017, with one or more additional launches each year through 2022. It plans to have 10 new immuno-oncology drugs in clinical testing by next year.

The largest U.S. drugmaker said 15,000 U.S. patients had used Ibrance, which is awaiting European approval. It had sales of $230 million for the quarter.

"A whole slew of (future) blockbuster drugs are getting traction today," said Tony Scherrer, director of research at Smead Capital Management. "The pipelines look great."

The three drugmakers all invest heavily in research and development, which led to the new medicines.

That stands in stark contrast to the business model of Valeant Pharmaceuticals International, which is known for buying companies and slashing R&D. The Canadian company has come under fire for its business practices, which include sharply raising prices of the drugs it acquires.

The high cost of prescription drugs has become a major topic of the current U.S. presidential campaign, with calls by candidates and others to rein in prices and out-of-pocket expenses to patients.

Merck Chief Executive Officer Ken Frazier called the pricing discussions "a lot of noise" that he does not believe will tarnish the industry's reputation.

Pfizer CEO Ian Read said he believed that higher co-pays demanded by insurers were more of a problem for patients than prices charged by drugmakers.

"We must preserve the market-based system in the U.S. that enables us to develop breakthrough treatments and cures for patients," Read said.

Bristol-Myers shares were up 2.5 percent at midday, while Pfizer rose 2.2 percent, and Merck gained 1.4 percent.

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