Drugmakers report 4Q sales up around 10 percent, but profits and outlooks are a mixed bag

Drugmakers post higher sales but a mix on profits

TRENTON, N.J. — Fourth-quarter revenues climbed about 10 percent for major drugmakers AstraZeneca PLC, Bristol-Myers Squibb Co. and Eli Lilly & Co., mainly buoyed by sales of drugs for heart disease, depression and other mental illnesses.

But one-time charges muddied the profit picture, while two heavily touted new drugs tanked and the companies’ prospects range from fair to bleak, depending on how soon generic competition starts eroding sales of their blockbuster drugs.

For AstraZeneca that starts this year and the Anglo-Swedish maker of cholesterol fighter Crestor and schizophrenia drug Seroquel XR said it will ax 8,000 more jobs, or 12 percent of its work force, by 2014.

“It’s really a mixed bag,” Erik Gordon, a professor and analyst at the University of Michigan’s Ross School of Business, said of Thursday’s earnings reports from the drug companies.

He said he was struck by the dramatically different approaches of the three companies to their looming loss of patent protection for key drugs.

Bristol-Myers, which has shed its nutrition products business and transformed itself into a biopharmaceutical company, has $9.9 billion in its coffers and is hunting for biotech companies or drugs. Eli Lilly is focusing on developing new drugs in-house or through its existing partnerships. But AstraZeneca, Gordon noted, instead is going for a short-term boost in share price by buying back $1 billion worth of its stock.

Jim Cornelius, Bristol’s chief executive, talks up all the cash he has available to buy prime assets, Gordon said.

“He basically says, ‘I’m going out moose hunting,’” Gordon said. “Eli Lilly isn’t going hunting or maybe will shoot a rabbit, and then AstraZeneca says, ‘We’ve got no bullets, so we’ll give the gun back to the shareholders.’”

Wall Street appeared to like New York-based Bristol-Myers’ results and its plans early in the day, but the company’s shares finished the day down 20 cents at $24.10. Shares of Indianapolis-based Lilly were down all day, shedding 64 cents to $35.75. Investors punished AstraZeneca, pushing its shares down 5.4 percent to $46.96 in New York trading.

Edward Jones analyst Linda Bannister said the companies all got a boost to sales of several percent thanks to favorable currency exchange rates.

“There’s some decent volume growth, depending on the product,” she added.

Bristol-Myers, which forecast adjusted 2010 earnings per share of $2.15 to $2.25, well above last year’s, reported a huge jump in fourth-quarter profit to $8.03 billion — because of a $7.2 billion gain from selling infant formula maker Mead Johnson. Excluding that and other one-time items, the company had earnings per share of 47 cents, 6 cents better than what analysts expected, on sales of $5.03 billion, just ahead of analysts’ forecast.

The maker of blockbuster blood thinner Plavix, the world’s second-best-selling drug, said total sales were up 11 percent, with double-digit jumps for Plavix, HIV treatments Reyataz and Sustiva, and schizophrenia-bipolar disorder drug Abilify. But its promising new Type 2 diabetes treatment Onglyza, now on sale in the U.S. and six European countries, brought in only $4 million, a tiny fraction of what analysts expected.

Lilly had a similar problem with its new blood thinner Effient, which saw sales drop from a $22.6 million debut in August to $3.8 million for all of the fourth quarter. Analysts have forecast annual sales hitting up to $1 billion within a few years.

Both drugs are up against well-established competitors, and analysts and company executives say of late it’s becoming harder for new drugs to take off. They must first get coverage approval from managed care insurers and also win over individual doctors, who increasingly are concerned about heart and other side effects with some new drugs.

“Physicians worry about drug safety, so if you have a product that’s working for your patient, why switch” as soon as a new one comes out?” Bannister said.

Still, Lilly did OK because its top seller, antipsychotic drug Zyprexa, had double-digit sales growth to $1.36 billion, and its No. 2 drug, antidepressant Cymbalta, rose 15 percent to $830.8 million.

The company earned $915.4 million — 91 cents per share excluding charges — on sales of $5.93 billion. That beat analysts’ forecasts on sales, but Lilly missed their earnings forecast by a penny.

Company leaders did note they have 29 compounds moving through mid- or late-stage human testing.

AstraZeneca said its fourth-quarter profit rose 26 percent to $1.56 billion, and sales were up 9 percent to $8.95 billion, boosted by a good performance in emerging markets and strong sales of its swine flu vaccine. But its adjusted earnings per share of $1.42 missed analysts’ forecasts of $1.54 to $1.57 per share, and the outlook provided little relief.

Meanwhile, specialty drug and medical device maker Baxter International saw sales rise 11 percent to $3.47 billion.

The maker of blood plasma, kidney dialysis treatments and cancer drugs earned $572 million, or 94 cents per share — $1.03 per share excluding one-time charges — in line with analysts’ estimates. But Baxter, which is based in Deerfield, Ill., said it expects to earn $4.20 to $4.28 per share in 2010, and the average analyst estimate is for $4.28.

Shares of Baxter fell 71 cents to $58.20.