third quarter 2012 earnings (excluding special items) of 99 cents
per share handsomely beat the Zacks Consensus Estimate of 78
cents and the year-ago earnings of 89 cents per share. Lower
selling, general & administrative costs boosted earnings in
the reported quarter.
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Revenues in the reported quarter declined 7% to $606 million. The
decline was primarily attributable to lower sales of its
osteoporosis drug, Actonel -- acquired from
Procter & Gamble Co.
) in 2009 -- due to generic competition. Moreover, reduced sales
of dermatological product Doryx also hurt revenues in the
reported quarter. Revenues, however, beat the Zacks Consensus
Estimate of $601 million
Revenues from osteoporosis products declined 22% to $138
million. Actonel sales declined 28% to $119 million. The
loss of patent exclusivity of the drug in Western Europe in
December 2010 hurt revenues in the quarter. Bulk of the revenues
(64.7%) came from the US market. US sales of the drug were down
7% in the third quarter of 2012 due to a 36% decrease in filled
Warner Chilcott, which expects Actonel sales to continue
declining, believes that osteoporosis therapy Atelvia (launched
in December 2010) will help to counter loss of revenues from
Actonel in the US. Atelvia contributed $19 million to total
revenue in the third quarter of 2012, up 18.8% sequentially.
Revenues from oral contraceptives inched up 1% to $131 million.
An increase of 43% in the sales of Lo Loestrin FE (launched in
the US in 2011) to $33 million more than mitigated the 8.7%
decline in the sales of Loestrin 24 FE. Sales of Loestrin 24 FE
declined due to lower filled prescriptions coupled with an
increase in sales-related deductions.
Sales of hormone therapy products climbed 10% to $56 million in
the third quarter of 2012, driven by increased sales of Estrace
cream (up 7% to $45 million). A 13% increase in filled
prescriptions along with higher average selling prices led to the
rise in Estrace cream sales in the reported quarter.
Sales of dermatological product Doryx declined 31% to $20
million. Generic competition and an increase in sales-related
deductions hurt sales of the drug during the reported quarter. We
remind investors that on April 30, 2012, a US district court
issued a verdict regarding
) applications to the US Food and Drug Administration (FDA) to
sell their generic versions of the drug. The court ruled that the
generic versions of neither of the companies infringed the patent
Sales of gastroenterology product Asacol and urology product
Enablex were more or less flat at $191 million and $45 million,
Selling, general and administrative (SG&A) expenses were down
15% in the reported quarter to $183 million. The decline was
attributable to cost savings as a result of the move to the
distributor model in Western Europe, reduced co-promotion
expenses as a result of lower Actonel sales in ex-US markets and
a reduction in the US field sales forces. Research and
development (R&D) costs declined 3.8% to $25 million in the
third quarter of 2012.
2012 Earnings Outlook Upped
Apart from announcing its third quarter 2012 results, Warner
Chilcott upped its 2012 adjusted earnings guidance. The company
now expects adjusted earnings in the range of $3.75-$3.85 per
share (previous guidance: $3.55-$3.65).
The company also trimmed its guidance for SG&A expenses to
$725-$775 million (previous guidance: $775-$825 million). Cost
savings due to the restructuring of the company's operations in
Western European nations such as Belgium, the Netherlands,
France, Germany, Italy, Spain, Switzerland and the UK contributed
to the reduced guidance. R&D expenses are now projected in
the range of $90-$110 million (previous guidance: $100-$120
Warner Chilcott continues to expect revenues in the range of $2.4
billion and $2.5 billion. The Zacks Consensus Estimate currently
hints at earnings of $3.88 per share on revenues of $2.49 billion