Two Mega-Launches in Pharma Industry

Dreaded patent cliffs and failed clinical trials are all we seem to hear from Big Pharma these days. Major drug companies – think Pfizer (PFE), Merck (MRK), Sanofi (SNY), GlaxoSmithKline (GSK), Bristol-Myers Squibb (BMY) and AstraZeneca (AZN) – have suffered outright revenue declines as they’ve lost patent protection on one-time blockbuster drugs and their company labs have failed to develop enough new medicines.

PFE Revenue (TTM) Chart

PFE Revenue (TTM) data by YCharts

But there are some notable successes in the drug industry. Two new drugs appear destined to generate $1 billion or more in revenue in their first four quarters, a rarity in an industry that more typically builds a drug’s following over a longer period of time.

The drugs, according to a study by EP Vantage, which covers the pharma industry closely, are Biogen Idec’s (BIIB) Tecfidera, which launched March 31 and appears well on its way to $1 billion in first-year sales; and Gilead Sciences’ (GILD) Sofosbuvir, which goes on sale in December and is expected also to generate $1 billion-plus in first-year sales. (These figures quoted here are all U.S. market-only. Drugs, of course, are increasingly a global product and worldwide sales, depending on regulatory approvals outside the U.S., could be much larger.)

Sales certainly aren’t shrinking at Biogen, which has seen its stock soar 65% year-to-date.

BIIB Revenue (TTM) Chart

BIIB Revenue (TTM) data by YCharts

Nor at Gilead, which has seen its stock rocket up 92% year-to-date.

GILD Revenue (TTM) Chart

GILD Revenue (TTM) data by YCharts

Growth, of course, costs a bit more in pharma, as seen in a chart of forward PE ratio. To find out whether the fast growers are good stock picks or not requires thorough use of some investment research tools. And reading the10-Ks wouldn't hurt.

BIIB PE Ratio (Forward) Chart

BIIB PE Ratio (Forward) data by YCharts

Gilead, according to EP Vantage’s study, has another huge launch on its hands with Stribild, which launches in August 2012 and is expected to nearly reach $1 billion in sales in 2014. EP Vantage says the drug is expected to keep building its base of users from there, perhaps with annual sales of $3.5 billion. That’s a more traditional growth pattern for a drug.

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.



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