We recently initiated coverage on
Warner Chilcott plc
) with a Neutral recommendation and a target price of $13.00.
PROCTER & GAMBL (PG): Free Stock Analysis
WARNER CHIL PLC (WCRX): Free Stock Analysis
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Warner Chilcott, formed through multiple acquisitions and
divestitures, is headquartered in Dublin, Ireland. Warner
Chilcott is a specialty pharmaceutical company engaged in
developing, manufacturing, selling, and marketing branded
prescription pharmaceutical products for women's healthcare,
gastroenterology, dermatology and urology.
The women's healthcare franchise primarily caters to the hormonal
contraceptive, osteoporosis and hormone therapy markets. The
primary products in the hormonal contraceptive sub-group include
Loestrin 24 FE and Lo Loestrin FE. Actonel and its next
generation version Atelvia are the primary osteoporosis drugs at
Warner Chilcott. The drugs are marketed for the prevention and
treatment of postmenopausal osteoporosis. Estrace cream, approved
for treating vaginal and vulvar atrophy, is the primary hormone
therapy products at Warner Chilcott.
The gastroenterology division primarily includes Asacol, approved
for treating ulcerative colitis. Asacol consists of two versions
- Asacol 400 mg and Asacol HD (800 mg). Currently, acne drug
Doryx is the sole dermatological offering at Warner Chilcott.
Enablex, used for the treatment of overactive bladder, is the
primary drug marketed under the urology segment.
Geographically, Warner Chilcott operates through two segments -
North America and the Rest of World (ROW). The North American
segment includes the US, Canada and Puerto Rico.
With a significant part of its top line likely to be exposed to
generic competition in the next few years, Warner Chilcott is
looking towards cost-cutting initiatives to drive the bottom
line. Following the genericization of Actonel in Western Europe
in late 2010, Warner Chilcott announced in April 2011 its
decision to reorganize its operation in Western European nations,
such as Belgium, the Netherlands, France, Germany, Italy, Spain,
Switzerland and the UK. Following the implementation of the
restructuring plan, the company's workforce has been trimmed by
approximately 500 employees.
Cost savings due to the restructuring led the company to lower
its 2012 guidance for selling, general and administrative
(SG&A) costs. SG&A expenses for 2012 are now expected in
the range of $775-$825 million (previous guidance: $800-$850
million). Research & development (R&D) expenses are now
projected in the range of $100-$120 million (previous guidance:
$110-$130 million). Warner Chilcott's 2012 adjusted earnings
guidance is driven by reduced operating cost projection. The
company now expects adjusted earnings in the range of $3.55-$3.65
(previous guidance: $3.30-$3.40). We expect Warner Chilcott to
achieve the guidance.
We are impressed by Warner Chilcott's acquisition of
Procter & Gamble'
) global branded prescription pharmaceutical business in 2009.
The acquisition has broadened Warner Chilcott's product portfolio
significantly. Such prudent acquisitions should help Warner
Chilcott to sustain growth since generic competition is likely to
intensify further going forward.