Swine flu vaccine sales lift Glaxo, AstraZeneca and Sanofi

While the swine flu pandemic remains a downer for public health officials worldwide, the H1N1 virus proved to be an upper for several pharmaceutical companies' third-quarter earnings. GlaxoSmithKline (GSK), AstraZeneca (AZN) and Sanofi-Aventis (SNY), which make vaccines against the virus, posted higher profits this week as governments worldwide snatched up their immunization supplies.

Despite the global economic slump, most pharma companies reporting this week continued to best Wall Street's expectations. Many companies faced increased competition from generics, but the pressure was mostly offset by cost-cutting measures, as was the case with Pfizer's (PFE) earnings earlier this month. The maker of Viagra logged 26 percent higher third-quarter profit on Oct. 20, due mostly to site closures and job cuts.
In the latest batch of earnings, Anglo-Swedish AstraZeneca saw a 28 percent hike in quarterly profits to $3.4 billion, or $1.68 per share. Sales increased 10 percent (at constant exchange rate), or an actual 5 percent growth to $8.2 billion. Results beat estimates of $1.38 earnings per share and sales of $7.9 billion, according to Thomson Reuters I/B/E/S. Top-line growth was helped in part by sales of its H1N1 vaccine as it began shipping doses earlier this month to the U.S.

U.S. sales of the H1N1 vaccine totaled $152 million in the third quarter, accounting for a third of the company's sales and 2 percent of global revenue growth. The U.S. government ordered 40 million doses of the vaccine from Astra for a total of $453 million, which will likely help boost fourth quarter results as well. It's no surprise then that Astra hiked its full-year earnings guidance to a range of $6.20 to $6.40 vs. $5.70 to $6.00 previously.

Astra was quick to point out other positives, such as its U.S. sales of Toprol-XL, a heart drug, which benefited from withdrawal of generic products and accounted for 3 percent of global revenue growth at constant exchange rate to $293 million. It also highlighted the approval of its new diabetes treatment Onglyza.

And the company touted the the prospects for its heart drug Brilinta, which may not work well with high doses of aspirin. For now, it seems its attempts to convince investors it wasn't a one-trick pony and that it can find growth in other places have panned out.

London-based GlaxoSmithKline's orders of its vaccine worldwide were 10 times as much as Astra's, at 440 million doses so far. Glaxo confirmed on Wednesday it expects growth in the fourth quarter due to vaccine sales, with some £1 billion ($1.64 billion) in swine flu vaccine sales alone. Glaxo got another boost from the swine flu in orders of its flu drug Relenza -- it sold 15 times more of the drug than a year earlier at £182 million.

While third-quarter earnings per share grew by 13 percent to 28.5 pence (46.2 cents) due to currency fluctuations, it beat analysts' expectations only by a little. Revenue rose 15 percent to £6.76 ($10.95) billion, which the company claimed was due to its diversification drive as emerging market and consumer products sales increase. Still, less than 30 percent of third-quarter sales were generated from traditional pharmaceuticals and markets, compared with 38 percent last year.

Despite vaccine and flu drug sales (even as yields are improving), though, Glaxo's U.S. revenue fell 12 percent due to loss of sales to generics. Even as its sees a boost next quarter from vaccine sales, they won't come from the U.S. as the government ordered a small amount of Glaxo's adjuvanted vaccine and still hasn't approved its nonadjuvanted version. Glaxo's results were actually slightly below estimates, so it seems the diversification process is well needed.

French drugmaker Sanofi-Aventis -- despite posting higher earnings, beating expectations and raising its outlook for 2009 -- saw its shares fall over 1 percent in reaction to the earnings results as likely most investors have already priced in these events. EPS in the third quarter increased 16.3 percent to 1.71 euros, in part thanks to continued cost-cutting. The results beat analyst expectations for EPS of 1.61 euros. But sales, which were up 8 percent to 7.4 billion euros, just missed consensus of 7.44 billion euros.

For Sanofi, it wasn't all swine flu vaccine, although it didn't hurt as sales of the H1N1 vaccine were 78 million euros. But the expected competition from generics for such treatments as cancer drug Eloxatin and blood thinner Plavix was offset by revenue growth for other drugs such as anti-thrombosis treatment Lovenox (21.7 percent), insulin medicine Lantus (13.7 percent) and vaccines (4.8 percent).

Sanofi raised its outlook for 2009, thanks to sales of swine flu vaccine. It expects H1N1 vaccines to add about $500 million to its sales in the fourth quarter and expects similar sales in the first quarter. But Sanofi has other growth factors that could help, and it aims to diversify its business with deals such as its recent acquisition of French nutritional beauty supplements maker Oenobiol to expand its over-the-counter-drugs.

Sanofi is definitely not banking on swine flu vaccine to help it out of the patent expiration doldrums. For example, it started marketing Multaq, for irregular heart beats, in the U.S. in the quarter. Multaq, analysts estimated, could reach peak sales ranging from 1 billion to 1.5 billion euros. Sanofi is awaiting EU marketing approval. So far, prescriptions and reactions to Multaq were "very encouraging," Sanofi said.

Read Full Story
  • DJI27657.42-244.56-0.88%
  • NIKKEI 22523360.3040.930.18%
    Hang Seng24455.41114.560.47%
  • USD (PER EUR)1.180.00000.00%
    USD (PER CHF)1.10-0.0035-0.32%
    JPY (PER USD)104.53-0.1660-0.16%
    GBP (PER USD)1.29-0.0055-0.42%

From Our Partners