Weekly Healthcare Notes: Abbott Labs, Merck, Pfizer & JNJ

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The past week has been eventful for the healthcare sector, impacting many healthcare companies under our coverage. Firstly, the news of first ever case of a child being functionally cured of HIV infection surfaced and Abbott Labs' ( ABT ) Kaletra was amongst the drugs that were used in the treatment, which comes as a positive for the drug. Johnson & Johnson ( JNJ ), meanwhile, received a major setback as the FDA, for the second time, rejected its application to expand the use of Xarelto for acute coronary syndrome (ACS) patients, which will limit the peak sales potential of the drug.

On the other hand, Pfizer ( PFE ) was granted a reissue patent by the U.S. Patent & Trademark Office for its pain drug, Celebrex, delaying the entry of cheap generic versions of the drug by 18 more months. Merck ( MRK ) named Roger M. Perlmutter to head its R&D division, replacing Peter S. Kim, who is retiring this year. The move signifies Merck's focus on biologics and comes at a moment when Merck has had a series of setbacks in its pipeline.

Abbott Labs

Last week, the first well-documented case of a child being functionally cured of HIV infection came to light and Kaletra, an HIV antiviral manufactured by AbbVie (which inherited the drug from Abbott Labs following spin-off) was among the treatments prescribed for the infant. This could come as a boost for the drug, which has been witnessing a significant decline in sales due to competition and its exclusion from the list of preferred treatment options in some of the U.S. Department of Health and Human Services' (DHHS) guidelines.

The HIV market has a huge unmet demand as there is no complete cure available, and the current treatment only improves a patient's condition. Nearly 33 million people worldwide are estimated to be suffering from HIV. Without any effective treatment, the number is expected to continue to surge. Therefore, the news of someone being functionally cured, has the potential to boost the drug's sales. However, even if sales grow in the near term, the surge will not last for long as the drug is set to lose its patent in 2016. This will pave the way for entry of cheap generics in the market. We will soon release a separate model and price forecast for AbbVie, the split research-focused pharmaceutical company.

See Full Analysis For Abbott Labs

Johnson & Johnson

The FDA has rejected the drug maker's second application to expand the use of Xarelto to prevent heart attacks and strokes in patients who have previously experienced severe chest pain or heart attack (acute coronary syndrome or ACS). While the full details of rejection are yet to emerge, what may have worked against Xarelto is the lack of clinical data and reports of serious bleeding in some patients. As such, we believe that the chances of the drug getting approval for the condition are bleak now without which the drug will find it impossible to reach peak sales of $2 billion. We have discussed the full details in our note Johnson & Johnson: FDA Rejects Broader Use Of Anticlotting Drug Xarelto

However, we expect some relief to follow soon as the drug maker's blockbuster potential experimental drug, Canagliflozin, is expected to receive FDA approval by the end of the month. The type 2 diabetes drug had earlier shown strong efficacy in reducing blood sugar in diabetics, even as some safety concerns were also raised. The drug is expected to garner over $1 billion in peak sales. Read our note Johnson & Johnson Could Tap The Huge Diabetes Market With New Drug Approval for further details.

See Full Analysis For Johnson & Johnson

Pfizer

The U.S. Patent & Trademark Office has granted a reissue patent for pain drug, Celebrex, extending the drug's patent protection by 18 months. The patent extension will prevent cheap generic versions from entering the market, thus paving the way for continued growth in the drug's sales till end of 2015. This comes as another boost for the drug maker's Musculoskeletal drugs division after the FDA recently approved the blockbuster potential rheumatoid arthritis (RA) drug, Xeljanz (more popularly known as Tofacitinib). Read our note Pfizer: A Look At The Musculoskeletal Drugs Division for more insights.

See Full Analysis For Pfizer here

Merck

Merck ( MRK ) has appointed Roger M. Perlmutter as head of its R&D division, replacing its current R&D chief Peter S. Kim. The move comes days after the drug maker entered into a deal with Samsung Bioepis, and signifies the drug maker's growing focus on biologics and biosimilars (generics of biologics). In the last decade, Mr. Perlmutter's work has mostly been focused on biologics, which will lend support to Merck's efforts to tap biologics and biosimilars markets. We have discussed the full details in a note here.

See Full Analysis For Merck here

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AbbVie drug used in 'functional cure' of HIV infan



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: ABT , JNJ , MRK , PFE , RHHBY

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