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Specialty pharmaceutical companies look set for a period
of sustained growth, building on a very strong performance
in 1999. Leading companies in the specialty pharmaceuticals
sector, which covers generic,
drug delivery, and
therapeutic specialists, include Teva, Alza and Elan.
These three companies experienced revenue growths of 14.9%,
23.0% and 48.4% respectively in the year ending 1999. In
the same period, the three companies' net incomes rose by
39.6%, 21.9% and 38.0%, respectively.
Similarly strong results were repeated throughout the sector
in 1999, as Government cost containment measures encouraged
generic prescribing, and more products with new and innovative
drug delivery methods were launched onto the world market.
|
Company
|
Revenue
1999 ($m)
|
Revenue Growth 1998-99 (%)
|
Net Income 1999 ($m)
|
Net
Income Growth 1998-99 (%)
|
| Forest
|
873
|
59.8
|
77
|
46.0
|
| Teva
|
1,282
|
15.0
|
97
|
39.5
|
| Elan
|
1,004
|
48.0
|
253
|
38.0
|
| Allergan
|
1,406
|
12.0
|
143
|
22.1
|
| Alza
|
796
|
23.0
|
108
|
21.9
|
| Bristol-Myers
Squibb |
20,222
|
10.6
|
4,167
|
14.6
|
| *AstraZeneca
|
18,445
|
7.8
|
2,221
|
12.9
|
| Merck
& Co |
32,714
|
21.6
|
5,891
|
12.2
|
| Glaxo
Wellcome |
13,754
|
3.8
|
3,161
|
3.7
|
| Pfizer
|
16,204
|
19.6
|
3,179
|
-5.1
|
*AstraZeneca's
net income after exceptional items (mainly merger costs)
was $1,143m in 1999, a decline of 56.2% over 1998.
Source: IMS HEALTH Pharmaceutical
Company Profiles, Company annual reports.
With several major patent expiries looming and ever more
ingenious methods of drug delivery being devised, developed
and commercialized, the strong performance of the Specialty
sector is predicted to continue in 2000 and beyond.
Given this prediction and the Specialty sector's recent
performance, it was hardly surprising that the mood was
positive at this year's UBS Warburg Specialty Pharmaceuticals
Conference, held in New York on May 23 and 24. Talk was
of the Specialty companies "Rising to Another Level", in
their efforts to take on the global research-based industry.
According to analysts from UBS Warburg, Specialty Pharmaceutical
stock prices were up around 30% in the period from January
to May 2000, compared to just 6% for Big Pharma stocks in
the same period.
This outstanding stock performance has been partly driven
by recent legal victories for generics companies over research-based
companies, not least IVAX Corporation's paclitaxel patent
victory over Bristol-Myers Squibb (BMS) in April, in which
BMS relinquished its patent claims relating to the use of
Taxol for the treatment of ovarian cancer.
IVAX intends to launch paclitaxel on the US market in the
second half of 2000 and the company's vice chairman, Neil
Flanzraich, said on May 23, "We will have six months exclusivity,
just BMS and us in that $1.2bn market. We expect this to
be a very good product for us."
Some more practical reasons for the stronger stock market
performances of the Specialty companies relative to the
multinationals were aired by Allergan's CEO, David Pyott,
and CFO, Eric Brandt, in an interview with IMS HEALTH in
May 2000. It seems that the small size and focused therapeutic
base of the Specialty companies can be an advantage.
Mr Pyott claimed, "Of the core markets Allergan operates
in, we're at number one or number two in all of them. We're
a very small company, but we're a small company that's quick,
and that's the way we intend to continue."
In Mr Brandt's opinion, it is the firm management of costs
that gives the Specialty companies an advantage: "The big
pharmaceutical companies tend not to manage costs that tightly.
On the other hand, we go through the business, some people
would say, in an excruciating level of detail."
Whatever the explanations, there can be no doubting the
success of Allergan's recent strategy. And Wall St seems
to agree. The company's market capitalisation was $2bn when
David Pyott took over two years ago. On 23 May 2000, the
second day of the UBS Warburg Specialty Pharmaceuticals
Conference, it broke through the $9bn mark for the first
time.
Find information and analysis on the Pharmaceutical Corporations
discussed in this article at open.IMSHEALTH.com.
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