) first quarter 2013 earnings (excluding special items) of 92
cents per share handsomely beat the Zacks Consensus Estimate of
85 cents. Lower selling, general & administrative costs
boosted earnings in the reported quarter.
The company earned $1.16 per share in the first quarter of
2012. Including one-time items, first-quarter 2013 earnings
were flat at 45 cents per share.
Revenues in the first quarter of 2013 declined 13.4% to $593
million. The decline was primarily attributable to lower sales of
its osteoporosis drug, Actonel due to generic competition.
Moreover, reduced sales of dermatological product Doryx and
gastroenterology product Asacol hurt revenues in the first
quarter of 2013. Revenues, however, beat the Zacks Consensus
Estimate of $589 million.
Revenues from osteoporosis products declined 19.8% to $130
million. Actonel sales declined 24% to $111 million. The loss of
patent exclusivity of the drug in Western Europe in Dec 2010 hurt
revenues in the quarter. Bulk of the revenues (71.2%) came from
the US market.
US sales of the drug climbed 3.9% in the first quarter of 2013
due to a reduction in sales-related deductions and higher average
selling prices. An expansion of pipeline inventories also led to
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Warner Chilcott, which expects Actonel sales to continue
declining, believes that osteoporosis therapy Atelvia (approved
in the US in the fourth quarter of 2010) will help counter the
loss of revenues from Actonel in the US. Atelvia contributed $19
million to total revenue in the first quarter of 2013, up 19%.
Revenues from oral contraceptives climbed 6.3% to $151 million.
Sales of Lo Loestrin FE (launched in the US in 2011) jumped 85.7%
to $52 million in the first quarter of 2013. Sales of Loestrin 24
FE declined 13.9% to $93 million. Sales of Loestrin 24 FE
declined due to a 22% reduction in filled prescriptions.
Sales of hormone therapy products came in flat at $65 million.
Bulk of the sales came from Estrace cream, flat year over year at
$53 million. Sales of dermatological product Doryx declined 37%
to $19 million owing to generic competition for the 150 mg
version of the drug.
In Apr 2013, the US Food and Drug Administration approved Doryx
at 200 mg strength (delayed release tablets). The company intends
to launch the 200 mg version of the drug in Jul 2013. We are
positive on the approval of Doryx (200 mg) as it has extended the
life cycle of the drug at Warner Chilcott, following the
genericization of the 150 mg dosage of Doryx last year.
Sales of ulcerative colitis drug Asacol plummeted 27.5% to $153
million in the first quarter of 2013. A 30% reduction in US sales
primarily contributed to the decline. The decline in US sales was
primarily attributable to the company's decision to stop trade
shipments of the 400 mg version of Asacol in the US following the
approval and launch of Delzicol in the first quarter of 2013.
Delzicol sales came in at $5 million in the first quarter of
Selling, general and administrative expenses were down 9.6% in
the reported quarter to $179 million. The decline was primarily
attributable to reduced co-promotion expenses as a result of
lower Actonel sales in ex-US markets. Research and development
expenses were flat at $25 million in the first quarter of 2013.
2013 View Backed
Warner Chilcott maintained the guidance for 2013, issued by it on
Feb 8, 2013. The company expects to earn $3.20-$3.30 per share on
total revenues of $2.3-$2.4 billion in 2013. The Zacks Consensus
Estimate for 2013 pegs earnings at $3.29 per share on revenues of
Warner Chilcott still expects selling, general and administrative
(SG&A) expense in 2013 in the range of $750-$800 million.
Research and development (R&D) expenses in 2013 are expected
in the range of $115-$135 million.
Warner Chilcott in Merger Talks
On the same day, Warner Chilcott confirmed that it is in
preliminary discussions with generic player
) regarding a merger between the two companies. No further
details were disclosed. We expect investor focus to remain on the
outcome of talks going forward.
Warner Chilcott currently carries a Zacks Rank #3 (Hold).
Companies such as
Cubist Pharmaceuticals Inc.
) appear to be more attractive with a Zacks Rank #2 (Buy).