By Mary-Lynn Cesar for Kapitall
Greater demand for specialty drugs and higher drug prices pushed US prescription drug spending up 13.1 percent to an unprecedented $374 billion in 2014.
According to a report from research firm IMS Institute for Healthcare Informatics, a record 4.3 billion prescriptions were filled last year. Obamacare played an important role in driving up that number: the report reveals patients filled 25.4 percent more prescriptions in states with Medicaid expansion and only 2.8 more prescriptions in states without expanded eligibility. Take note, GOP .
Spending on specialty drugs-medication for chronic or serious conditions-grew by 26.5 percent, making it 2014's biggest mover. The bulk of the growth came from the $11.4 billion Americans spent on four new hepatitis C treatments. And these new hepatitis C treatments are expensive. Take Gilead Sciences' ( GILD ) Solvadi and Harvoni-the drugs sell for $1000 and $1125 a pill, respectively.
However, as more people take the drugs and more companies develop alternatives so they can enjoy some of those billions, it's likely the prices and demand for these costly hepatitis C treatments will go down. IMS Health Research Director Michael Kleinrock told the Los Angeles Times that he doesn't expect prescription drug spending to surge in a similar way this year, though he noted it "may be too early to tell."
For those who are bullish on prescription drug spending's 2015 prospects, below is a list of drugmakers that manufacture specialty drugs for a variety of conditions, from Parkinson's to chronic migraines. Each of the stocks had quarter-over-quarter (Q/Q) growth in sales of 25 percent or greater , which could be an indicator of positive sales trends.
Additionally, the stocks all have encouraging sources of profitability per the return on equity-analyzing DuPont equation. Each stock's increase in profits stems from an increase in profit margin and total asset turnover from the most recent quarter (MRQ) . If the stocks' profitability came from growth in financial leverage, that would be viewed negatively.
Click on the interactive chart to view data over time.
1. Impax Laboratories Inc. ( IPXL , Earnings , Analysts , Financials ): Engages in the development, manufacture, and marketing of bioequivalent pharmaceutical products. Market cap at $3.50B, most recent closing price at $50.09.
Sales growth Q/Q at 30.30%.
MRQ net profit margin at 0.09% vs. -9.55% y/y.
MRQ sales/assets at 0.122 vs. 0.101 y/y.
MRQ assets/equity at 1.216 vs. 1.231 y/y.
Makes Parkinson's medication.
2. POZEN Inc. ( POZN , Earnings , Analysts , Financials ): Develops products for the treatment of acute and chronic pain, and other pain-related conditions in the United States. Market cap at $261.52M, most recent closing price at $8.02.
Sales growth Q/Q at 110.60%.
MRQ net profit margin at 70.98% vs. -46.68% y/y.
MRQ sales/assets at 0.196 vs. 0.132 y/y.
MRQ assets/equity at 1.079 vs. 1.986 y/y.
Makes chronic migraine medication.
3. Supernus Pharmaceuticals Inc. ( SUPN , Earnings , Analysts , Financials ): Focuses on the development and commercialization of specialty products for the treatment of central nervous system diseases in the United States. Market cap at $582.42M, most recent closing price at $13.07.
Sales growth Q/Q at 199.00%.
MRQ net profit margin at 14.16% vs. -216.94% y/y.
MRQ sales/assets at 0.224 vs. 0.093 y/y.
MRQ assets/equity at 1.927 vs. 3.317 y/y.
Makes epilepsy medication.
(List compiled by Mary-Lynn Cesar. Monthly return data sourced from Zacks Investment Research. DuPont data sourced from Google Finance. All other data sourced from FINVIZ.)
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