Q4 results roundup 2019

With the full year results season drawing to a close, Richard Staines asks who the winners were and who has been left playing catch-up.

It’s hard not to talk about AstraZeneca first in any assessment of the recently announced set of full year results from big pharma, as the company’s turnaround is finally becoming a reality under CEO Pascal Soriot.

The company looked in dire straits five years ago, and almost got gobbled up by Pfizer in a takeover that would have likely led to a cull of many scientific projects because of cost cutting.

But Soriot fought off Pfizer and convinced shareholders to stick with his plan to develop the company’s pipeline and overcome the steepest patent cliff in pharma.

“A $1 billion chunk of GSK’s sales is set to crumble away this year.”

Results showing that the company’s sales are growing once again after a decade of decline suggest that shareholders did the right thing by sticking with Soriot, who says he sees no reason why the company won’t continue to grow in the coming years.

The success is mainly off the back of its new lung cancer drug Tagrisso but the company’s investment in US biotech MedImmune in 2007 has also started to bear fruit.

AZ is now retiring the name MedImmune after its former president Bahija Jallal quit at the beginning of the year after six years in charge.

Drugs developed under her leadership such as cancer drug Imfinzi are also starting to get approved and contribute to the revenues.

Soriot also announced a restructure of the company’s operations as several other leaders quit – but this could be seen as recognition of AZ’s success in recent years as these execs become highly sought after by rivals.

For now Soriot is insisting he will stay put, but whether he will stay around and see if AstraZeneca can hit a sales target of more than $40 billion in 2023 is another matter.

GSK finally feels the pain from Advair generics

Meanwhile, down in Brentford the other big UK pharma, GlaxoSmithKline, is also going through a transitional period.

CEO Emma Walmsley must finally face up to the patent cliff caused by generic competition to respiratory drug/device combination Advair in the US.

By rights generic Advair should have been on the market years ago, but the FDA is a tough taskmaster when it comes to copies of drugs that also incorporate a delivery device.

This has led to Advair remaining on the US market unchallenged for years after its patents expired – but finally Mylan’s version has launched and with it a $1 billion chunk of GSK’s sales is set to crumble away this year.

The company does have other irons in the fire such as shingles vaccine Shingrix, and HIV drugs from its ViiV joint venture.

This increase in sales elsewhere in the company mean the Advair generic hit will translate into a “slight decline” in earnings.

The results period also saw GSK clinch one of the most eye-catching R&D deals of the last few months, which underlines its commitment to developing new cancer drugs.

It is to work with Germany’s Merck KGaA on M7824, a novel immunotherapy that made waves at the European Society for Medical Oncology (ESMO) conference in the autumn.

“Luckily for Roche growing sales of new drugs are making up for the declining sales from its ‘big three’ medicines”

Troubled times at Teva and AbbVie

One company that is not doing so well is Teva, which produced a disappointing set of results where it narrowly missed earnings targets, and falling fourth quarter revenues of $4.52 billion, down from $5.46 in the same period last year.

While the company is known for its generics, it has been on relying on some branded products to prop up its revenues for years.

But the biggest seller of these, the MS drug Copaxone (glatiramer) is off patent and facing generic competition, and generic sales in the important US market are also down.

CEO Kare Schultz is busy restructuring the company and is aiming to cut costs by around $3 billion by the end of the year.

Another pharma facing a fearsome patent cliff is AbbVie, as its inflammatory diseases drug Humira (adalimumab) has seemingly hit is sales peak as cheaper biosimilars have been launched outside the US.

Full year sales were just under $20 billion, making Humira the world’s highest grossing drug, but revenues from Q4 showed a sharp decline in ex-US revenues as biosimilars hit the European market, where the drug lost its patent protection in October.

AbbVie has had to lower its price in countries like the UK, where the NHS has struck a new deal involving biosimilars that could save up to £150 million a year.

The decline is expected to continue in Europe, although US biosimilars have so far been prevented from hitting the US market until 2023 because of legal defences set up by AbbVie.

Pfizer is also under pressure after announcing that revenue growth will be flat in 2019 because its blockbuster erectile dysfunction drug Viagra is due to lose US patent protection, along with big-selling painkiller Lyrica.

MS drug saves Roche

Roche is not without its patent problems – its three largest selling drugs Avastin, Herceptin, and Rituxan/MabThera, are all threatened by cheaper biosimilars.

The company would have needed to fill a $21 billion-sized hole if it had lost all the sales from those drugs overnight, but luckily for Roche growing sales of new drugs are making up for the declining sales from its “big three” medicines.

CEO Severin Schwan said new drugs accounted for around 90% of the sales growth, adding that the launch of multiple sclerosis drug Ocrevus had been one of the most successful in the company’s history.

Ocrevus was FDA approved in March 2017 and at the beginning of last year in the EU – and generated revenues of around $2.4 billion last year alone.

Roche’s more recently approved haemophilia A drug Hemlibra (emicizumab) is also expected to generate blockbuster revenues in the future.

Group sales climbed to around $57 billion, with net income increasing 24%, including benefits from the US tax overhaul at the beginning of the year, slightly ahead of a consensus poll from Reuters.

Meanwhile the other big Swiss pharma Novartis produced a so-so set of results – Q4 operating profits rose to $3.39 billion but this missed expectations of around $3.44 billion, although sales of $13.3 billion matched the average forecast in a Reuters poll.

Novartis was the first company to get a revolutionary CAR-T cancer therapy approved, but has been busy trying to find ways to get the expensive and tricky to manufacture cell therapies to patients in the US and EU.

For 2019, Novartis is gearing up for one of the year’s biggest drug launches with Zolgensma, a gene therapy for spinal muscular atrophy under review by regulators in the US and Europe.

CEO Vas Narasimhan will be hoping that revenues from this much-anticipated drug will help lift its next set of full-year results.