) second-quarter 2012 earnings (excluding special items) of $1.03
per share handsomely beat the Zacks Consensus Estimate of 80 cents
and the year-ago earnings of 94 cents. Lower selling, general &
administrative costs boosted earnings in the reported quarter.
Revenues in the reported quarter declined 4.8% to $638 million.
The decline was primarily attributable to lower sales of
osteoporosis drug, Actonel -- acquired from
Procter & Gamble Co.
) in 2009 -- due to generic competition. Moreover, reduced sales of
dermatological product Doryx hurt revenues in the reported quarter.
Revenues, however, beat the Zacks Consensus Estimate of $610
Revenues from osteoporosis products declined 17.4% to $166
million. Actonel sales declined 22.3% to $150 million. The
loss of patent exclusivity of the drug in Western Europe in
December 2010 hurt revenues in the quarter. Bulk of the revenues
(60%) came from the US. US sales of the drug were down 15% in the
second quarter of 2012 due to a 37% decrease in filled
Warner Chilcott, which expects Actonel sales to continue
declining, believes that osteoporosis therapy Atelvia (launched in
December 2010) will help counter the loss of revenues from Actonel
in the US. Atelvia contributed $16 million to total revenues in the
second quarter of 2012, flat sequentially.
Revenues from oral contraceptives climbed 17.4% to $135 million.
A 209% jump in the sales of Lo Loestrin FE (launched in the US in
2011) to $34 million more than mitigated the 9% 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 of hormone therapy products climbed 34.7% to $53 million
in the second quarter of 2012, driven by increased sales of Estrace
cream (up 21.1% to $46 million). A 15% increase in filled
prescriptions in addition to higher average selling prices led to
the rise in Estrace cream sales in the reported quarter.
Sales of dermatological product Doryx declined 28.1% to $23
million. Generic competition and an increase in sales-related
deductions hurt sales of the drug during the reported quarter.
We remind investors that Warner Chilcott suffered a huge blow
regarding the 150 mg dosage of Doryx in April 2012. On April 30,
2012, a US district court issued a verdict regarding
) applications to the FDA to sell their generic versions of the
drug. The court ruled the generic versions of neither of the
companies infringed the patent of Doryx. Following the verdict,
Mylan entered the US market with its generic version of Doryx 150
mg in May 2012.
Sales of gastroenterology product Asacol and urology product
Enablex were more or less flat at $187 million and $41 million,
Selling, general and administrative (SG&A) expenses declined
30% in the reported quarter to $173 million. All the components of
SG&A expenses- advertising and promotion costs, selling and
distribution expenses and general, administrative and other-
declined in the reported quarter. Research and development
(R&D) costs declined 8% to $23 million in the second quarter of
2012 Earnings Outlook Upped
Apart from announcing second quarter results, Warner Chilcott
upped its 2012 adjusted earnings guidance. Warner Chilcott now
expects adjusted earnings in the range of $3.55-$3.65 (previous
guidance: $3.30-$3.40). The Zacks Consensus Estimate of $3.61 per
share is well within the company's new guidance range.
Warner Chilcott trimmed its SG&A guidance to $775-$825
million (previous guidance: $800-$850 million). Cost savings due to
the restructuring of Warner Chilcott'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
$100-$120 million (previous guidance: $110-$130 million).
Warner Chilcott continues to expect revenues in the range of
$2.4 billion and $2.5 billion. The Zacks Consensus Estimate is
We currently have a Neutral recommendation on Warner Chilcott in
the long run. The stock carries a Zacks #3 Rank (Hold rating) in
the short run.
IMPAX LABORATRS (IPXL): Free Stock Analysis
MYLAN INC (MYL): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis
WARNER CHIL PLC (WCRX): Free Stock Analysis
To read this article on Zacks.com click here.