The net profit of 15 leading international pharmaceutical companies declined by 4.2 per cent during the first nine months ended September 2008 to US$ 70,274 million from $ 73,370 million in the corresponding period of last year. The lower growth in net earnings of 15 international pharma companies continued in current year also and the year 2008 may prove to be a difficult one mainly due to slowdown in highly regulated markets, stiff generic competition and relatively lower outcome from the investments in research & development. Considering the current recessionary conditions, the sales and net profit growth will be significantly under pressure this year.
The slower growth in net profit can be seen from the Pharmabiz study of top 15 global pharmaceutical companies for the year 2007 and 2006. The study revealed that the net profit improved only by 4.7 per cent in 2007 as against a growth of 25.6 per cent in previous year.
The net profit during the first nine months of 2008, after adjustment and taxation, at constant exchange rate of Bayer, Eli Lilly, GlaxoSmithKline (GSK), Novartis, sanofi-avantis, Schering-Plough and Wyeth declined during the first nine months of 2008. However, the net profit of Abbott, Amgen AstraZeneca, Bristol-Myers Squibb (BMS), Johnson & Johnson (J&J) Merck & Co and Pfizer moved up and restricted the drop in net profit to some extent. Roche Group has not announced net earnings and other details for the period.
The R&D expenditure of 15 companies increased only by 3.5 per cent during the first nine months of 2008 to $50,197 million from $48,504 million in the corresponding period of last year. The R&D expenditure of GSK, Merck & Co, Pfizer and Amgen declined during the first nine months as compared to last year.
The pharmaceutical sales of 15 companies increased by 5.2 per cent to $281,494 million during the first nine months of 2008 from $ 267,546 million in the similar period of last year. According to Pharmabiz study the pharmaceutical sales of 15 leading companies reached at US $378 billion in 2007 as against $348 billion in the previous year. This shows that the growth in pharmaceutical sales will be under pressure and it may be negative in the current year.
The sales of GSK and Merck & Co declined by 8.5 per cent and one per cent respectively. Pfizer's pharmaceutical sales improved only by 0.6 per cent to $ 32,933 million from $ 32,722 million. Similarly, pharmaceutical sales of Amgen, AstraZeneca, Bayer, J&J, Roche, sanofi-avantis and Wyeth increased only by single digit during the period under review. Schering-Plough recorded significant growth of 50 per cent in pharmaceutical sales during the nine months ended September 2008 to $ 10,798 million.
The total sales, including pharmaceutical, vaccines, consumer health products, diagnostic products and nutritional products of 15 companies increased by 5.2 per cent to $376,902 million from $358,116 million in the corresponding period of last year. J&J has total sales of $48,565 million and its pharmaceutical sales are only $18,882 million. Similarly, Bayer's total sales amounted to $36,115 million but its pharmaceutical sales are only $ 16,279 million.
GSK, the world's second largest pharma company, has suffered setback in dollar terms and its net profit declined by 22.5 per cent to $6,715 million during the first nine months of the 2008 from $8,670 million in the last period mainly due to several mature pharmaceutical brands encounter generic competition in the USA. Its pharmaceutical sales declined by 8.5 per cent to $26,495 million from $28,946 million in the similar period of last year and its sales in US dropped by almost 21 per cent to $11,574.
Novartis net profit, after provision for consumer health operations, plunged by over 39 per cent to $6,684 million during the first nine months of 2008 from $ 11,055 million in the same period of last year. However, the net income before the figures of discontinued consumer health operations improved by 19 per cent to $6,656 million from $5,609 million. Its sales increased by 11.5 per cent to $31,382 million of which pharmaceutical sales amounted to $19,901 million, a growth of 11.3 per cent. The company reaffirms expectations for another year of record net sales and earnings in 2008. The company is undertaking an innovative new marketing programme in US to reduce cost.
Eli Lilly and Co experienced heavy setback and its net profit went down sharply by 25.8 per cent to $1,558 million from $2,099 million in the corresponding nine months of 2007 basically due to asset impairments, restructuring and other special charges. Its net sales went up by 13 per cent to $15,168 million from $13,444 million. The company management has taken decisions to advance its pipeline, increase productivity and transform its business model during first three quarters of 2008. Eli Lilly has lowered its guidance and now expects to record a loss of $1.56 to $2.6 per share.
Pfizer's sales for the first nine months of 2008 improved only by 1.1 per cent to $35,950 million from $35,548 million in the corresponding period of last year. Its pharmaceutical sales improved slightly by 0.6 per cent to $32,933 million mainly due to the loss of US exclusivity of Norvasc (March 2007), Zyrtec (January 2008) and Camptosar (February 2008) which collectively decreased revenues by $2.1 billion. The company has taken several cost reduction measures steps. Its R&D expenditure declined to $5,642 million from $4,829 million in the last period.
The sales of Merck & Co remained almost stagnant at $17,818 million despite US sales of pharmaceutical declined by 9 per cent to $9,974 million. The company is taking steps to reduce cost by eliminating 7,200 jobs across all areas by the end of 2011 and accelerating the rollout of a new, more customer-centric selling model. It anticipates a full year 2008 EPs range of $3.45 to $3.55.
Sanofi-aventis has suffered a setback during the nine months ended September 2008 and its sales and net profit declined by 5.2 per cent and 4 per cent respectively. Despite fall in profits, the company management raised its 2008 full-year guidance and now expects growth in adjusted EPS to be around 9 per cent.
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