Covid-19 products face tougher future
We are in the midst of 2023’s first reporting period and many of the world’s largest pharmaceutical companies have presented their figures for the full year 2022. A theme is that products related to the Covid-19 pandemic seem to have reached their peak sales and will face a significantly tougher market going forward. BioStock took a closer look at some of the reports.
Several of the world’s largest pharmaceutical companies recently released their financial statements for the full year 2022. Among the reporting companies we find Pfizer, Amgen, Glaxo-Smith Kline (GSK), Novartis, Roche, Bristol-Myers Squibb (BMS), Merck and Novo Nordisk, among others. The pharma giants’ shares, which are usually seen as defensive in turbulent times, have done relatively well in comparison with stock markets in general. How have the companies fared if we examine the details? This article takes a closer look at that question.
Reduced demand for Covid-19 products
US Pfizer is currently focusing heavily on the Covid-19 products Comirnaty and Paxlovid. In 2022 the products accounted for over half of the company’s total sales, which amounted to just over USD 100 billion. After the success during the pandemic, the company seems to have reached peak sales for the two drugs. The company is guiding for a drop in sales of the two products by over 50 per cent in 2023.
The same picture is painted by GSK, which does not expect any significant sales related to Covid-19 in 2023. As a result, the company expects full year sales to fall by approximately 9 per cent in 2023 compared to 2022.
Another company affected by an ever-lower demand for Covid-19 products is Swiss Roche, which reported a sales drop of over 20 per cent for Actemra, which in addition to Covid-19 is also used in the treatment of rheumatoid arthritis. In 2022, the company managed to fend off the lower Covid-19-related sales with sales successes for, among other things, the blockbuster MS drug Ocrevus, which had sales of just over 6 billion CHF during the year.
Merck continues to ride the wave of success of Keytruda
American Merck had a strong 2022 and achieved an impressive 22 per cent growth. An important component of the growth rate was Lagevrio, a treatment for mild to moderate Covid-19. The drug sold for a total of approximately 5.7 BUSD in 2022, which corresponded to just under 10 per cent of the company’s full-year sales.
Another important component is the antibody treatment Keytruda, which is predicted to become the best-selling drug in the world in 2023. Last year, the drug sold for about 21 BUSD, which corresponded to about a third of the company’s entire revenue. Read more about the story behind Keytruda here.
The good performance has also been rewarded by the stock market and Merck’s share has risen by about 34 per cent in one year.
Big deals continue to characterise the giants
Acquisitions, mergers, and spin-offs continue to be an important part of pharmaceutical companies’ growth strategies. In 2022, we saw some slowdown in the area, albeit from high levels in the previous years. That did not mean it was all quiet, though. American Amgen acquired sector peer Horizon Therapeurics for 28 BUSD, giving them access to a portfolio targeting several serious inflammatory diseases. Amgen is also in the spotlight with the launch of Amjevita, the first biosimilar of Abbvie’s antibody treatment Humira, the best-selling drug last year if we do not take the Covid-19 vaccines into account.
One company that has decided to shift its focus from generics is the Swiss company Novartis. Last summer, the company announced a new strategy, where the focus going forward will be completely on developing new drugs. This means, among other things, that the generics business in Sandoz, which today accounts for about 20 per cent of total sales, is being spun off. Speaking of Sandoz, the launch of their Revlimid copy is currently in full swing in Europe. Revlimid, for the treatment of multiple myeloma, is one of BMS’s major sales successes. In 2022 the drug sold for just over 9 BUSD, a decline of more than 20 per cent from the peak year of 2021.
However, BMS has managed to fend off the decline of the bestseller with sales success for the anticoagulant Eliquis and the cancer treatment Opdivo. In 2022, these two drugs sold for 11.7 BUSD and 8.2 BUSD, respectively.
Novo Nordisk struggles to meet demand
One of the best performing companies at the moment is Danish Novo Nordisk. The company showed a growth of as much as 25.7 per cent for the full year 2022. The main driver behind the development is the company’s GLP-1 inhibitors, where semaglutide, under the Ozempic, Wegovy and Rybelsus brands, now account for over half of the company’s sales.
Novo Nordisk states that one of their biggest challenges is to meet the high demand for the company’s products. Therefore, it invested 12 BDKK in 2022 to expand its production capacity.
The positive development has not gone unnoticed on the stock market. During the last twelve months, Novo Nordisk’s stock has risen by 45 per cent.
Another Nordic pharmaceutical company whose share has performed well in the past year is AstraZeneca. The stock has climbed about 30 per cent over the past twelve months. The Swedish-British company will release its full-year report on February 9, and we will then find out if there is justification for the market’s positive attitude towards the share. According to Zacks Investment Research, AstraZeneca is expected to report earnings of 0.71 USD per share for the fourth quarter of 2022.
|Company||Earnings per share Q4 2022 – actual||Earnings per share Q4 2022 – estimate||Stock development 1 year|
|Amgen||4,09 USD||4,10 USD||+9 %|
|Bristol-Myers Squibb||1,82 USD||1,72 USD||+13 %|
|Glaxo-Smith Kline||0,61 USD||0,50 USD||-23 %|
|Merck||1,62 USD||1,54 USD||+34 %|
|Novartis||1,52 USD||1,44 USD||-1 %|
|Novo Nordisk||6,02 USD||5,83 USD||+45 %|
|Pfizer||1,14 USD||1,05 USD||-4 %|
|Roche||20,3 CHF (full year 2022)||20,61 CHF (full year 2022)||-18 %|
Source for estimates: cnbc.com