The past week was handful of events for the healthcare sector.
First, Pfizer (
PFE
) received much awaited FDA approval for its blockbuster potential
blood thinner drug, Eliquis. Healthcare conglomerate Johnson &
Johnson (
JNJ
) followed the same with an early FDA nod for its experimental TB
drug Bedaquiline or Sirturo. Abbott Labs (
ABT
) started the new year by completing its much touted spin-off into
two separate companies. In addition, the company received FDA
approval for its next generation Xience Xpedition drug eluting
stent (
DES
). Meanwhile,
UnionHealth Group
(
UNH
) stock plummeted nearly 5% on Thursday after influential
investment bank Deutsche Bank downgraded rating of the company's
shares to hold from outperform.
Pfizer
Pfizer had a big reason to celebrate on new year's eve as its
blockbuster potential blood thinner drug Eliquis received coveted
U.S. FDA nod for patients with atrial fibrillation, which is not
caused by a heart valve problem. The much anticipated approval adds
to recent positive developments around the drug as recently the
drug secured Europe and Japan's approval for expanding the use to
non-valvular atrial fibrillation or NVAF (irregular heart beat)
patients. The approval will open the much larger U.S. market that
has evaded the drug until now and will bring reprieve for Pfizer's
cardiovascular franchise, which is grappling with patent expiry of
Lipitor. Pfizer lost patent protection for its once mighty drug
Lipitor in Nov 2011, putting at risk about $10 billion in the
division.
With addition of new indications like treatment for VTE, acute
coronary syndrome (related to the blockage of coronary arteries)
etc and Pfizer's already huge cardiovascular sales force, Eliquis
could garner expected peak sales of $3 billion. Read our note
Pfizer Secures Coveted FDA Approval For Eliquis
for detail analysis.
See Full Analysis For Pfizer here
Johnson & Johnson
Johnson & Johnson also entered 2013 with a major boost as
its experimental drug for the treatment of multi-drug resistant TB
(MDR-TB), Bedaquilinean was approved by the FDA under its
accelerated approval program. The approval was widely anticipated
after the drug exhibited strong efficacy in mid-stage clinical
trials. The drug will be a part of the company's anti-Infectives
division, which is seeing a near-term decline in revenues due to
the Levaquin patent expiry. However, it will be a long way for the
drug to reach its potential peak sales as it will have to wait for
approvals from other countries, especially developing countries,
where TB is more widespread than the U.S. Read our note Johnson
& Johnson Updates: Receives FDA Approval For New Tuberculosis
Drug for detail analysis.
See Full Analysis For
Johnson & Johnson
here
Abbott Labs
Abbott Labs was in the news for a variety of reasons. The
diversified healthcare company completed its split into two
separate publicly traded companies. Abbott Labs is now left with
low margin but diversified products like generic drugs, nutritional
and medical devices in its portfolio while higher-margin
proprietary drugs like Humira, Tricor/Trilipx have been transferred
to AbbVie. Our current $67 price estimate for Abbott Labs is for
consolidated entity as it does not reflect the split. We will soon
update our model on availability of 2012 10-k form and
pro-forma financials. Read our note Abbott Labs Snapshot As AbbVie
Begins Trading for more details.
Further, Abbott Labs won FDA approval for its
next-generation Xience Xpedition DES.DES is placed into narrowed
/diseased coronary arteries and slowly releases a drug to block
cell proliferation to prevent arteries from re-narrowing. While
Abbott has already been selling Xience Xpedition in Europe, Asia
and the Middle East for a while, FDA approval will open the vast
U.S. market for the company. In our current model, stents are part
of the company's Vascular franchise, which has been Abbott's
largest contributor to growth of late due to the success of the
Xience and Promus coronary stents. Backed by such new
products, we expect the company's overall vascular market share to
increase to our expectations of over 17.5% by the end of the Trefis
forecast period.
See
Full Analysis
For Abbott Labs here
UnitedHealth Group
UnitedHealth's stock took a beating on Thursday after a
downgrade from Deutsche Bank (from outperform to hold with reduced
target price of $61). The investment bank cited growing price
competition for the healthcare insurance provider. This added to
negative sentiments around the stock. Recently, in its investor
conference, the company expected a continued decline in fully
insured commercial customers in 2013, as more businesses are seen
covering healthcare costs themselves while they hire the insurer to
manage healthcare benefits.
But, we think this downtrend should be temporary as we already
anticipate margins pressure in our model due to many employers
cutting healthcare benefits in response to market conditions.
However, as economic conditions gradually improve we expect
employer-sponsored health coverage to increase along with the
quality of those plans (which will in turn bring higher
premiums).
Further, we believe that the benefits for UnitedHealth from the
increase in enrollments from full implementation of Patient
Protection and Affordable Care Act ("PPACA") will outweigh the
pressures on pricing and margins. (Read UnitedHealth
Well-Positioned Going Into 2013, Stock Worth $69 )
See
Full Analysis
For UnitedHealth Group here
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