Our updated thoughts on the BMY-CELG transaction, MRK numbers ahead of the quarter, and the opportunity in adjuvant IO from our 3/15 Wolfe Healthcare Biweekly Webcast.
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A slide deck describing our updated fundamental outlook for the sector from our February Monthly Controversies report.
This 80p report covers the bull/bear case, current controversies, relative growth prospects and more for our 10 US & EU global pharmaceutical companies.
On Saturday afternoon (2/16/2019), MRK presented detailed results from its KEYNOTE-426 trial at ASCO-GU – earlier in the week partial details had been released. See Exhibit 1 for how results compare to BMY’s Opdivo/Yervoy (CM-214) and PFE/Merck KGaA’s Bacenvio/Inlyta (JAVELIN Renal 101). The bottom line is that despite strong MRK data, BMY’s already-approved Opdivo+Yervoy will still likely retain some share in its labeled indication in 1L renal cell carcinoma (RCC); PFE’s regimen may also capture some share, but to a smaller degree. MRK’s data has been an overhang on BMY shares.
A killer pipeline and recent launches doing well – that is how we would characterize Roche in recent quarters. That strength was demonstrated again in Q4, but 2019 guidance – low to mid single digit growth in revs/EPS, with FX taking away perhaps 1 percentage point from that - captures the ongoing dynamics between new products ramping/launching and biosimilar erosion. On the pipeline, two NMEs should launche in 2019, with more on the come (meaning they launch downstream of 2019). On biosimilars, a similar timeline exists – i.e. some additional biosimilar launches will be underway (ex-US) in 2019, but it kicks into higher gear only later, in 2020+. This nets to 2019 being a quieter period for the company, where revenues and EPS will grow (albeit at modest levels).
Killer pipeline and recent launches doing well – that is how we would characterize Roche in recent quarters. That strength was demonstrated again in Q4, but 2019 guidance – low to mid single digit growth in revs/EPS, with FX taking away perhaps 1 percentage point from that - captures the ongoing tug-of-war between new product ramp and biosimilar erosion. On the pipeline, in 2019 two NME launches in 2019, with more on the come, meaning they launch downstream of 2019. On biosimilars, something similar is happening – a few launches are underway (ex-US), but most of this is still on the come as well, meaning it kicks into higher gear only later in 2019 and in 2020+. Because of strong recent launches and due to some biosimilar timeline slippage (US), 2019 will remain a quieter period for the company. In 2020, this tug-of-war between these two opposing forces will begin to play out more completely and this remains the key debate with the stock – namely, over a few year period, how will this net out to revenue and EPS growth? At least in our model....
Roche (ROG) reported 4Q18 and 2H18 financial results this morning (01/31/19) – beating on sales (2.7%) and 2H18 EPS (4.1%). 4Q18 revenues were SFr. 14.76B vs. our SFr. 14.47B and consensus SFr. 14.38B. 2H18 EPS were SFr. 8.30 vs. our SFr. 8.16 and consensus SFr. 7.97. The bottom line beat was helped by lower tax (19.3% vs. consensus 20.2%).
The Q4 2018 earnings season for our ten covered US/EU pharmaceutical companies is about to begin. It starts Thursday, January 24th with Bristol-Myers and ends Thursday, February 14th with AstraZeneca. This report contains our updated forecasts (out to 2028) and perspectives.
We track Emerging Markets growth rates for our covered companies. It has accelerated consistently since mid-2016; in Q3 2018 it was 11.6% y/y. From Q1 2012 to Q3 2018, y/y growth has been: 6.4% (10.3% (9.1% (9.5% (6.4% (10.3% (9.1% (9.5% (7.4% (6.1% (3.9% (9.5% (6.4% (8.3% (10.9% (8.0% (7.5% (4.7% (3.6% (3.2% (4.4% (1.8% (3.6% (3.3% (5.8% (6.1% (7.4% (7.5% (9.1% (9.5% (11.6% (Exhibit 1).
This report covers the bull/bear case, current controversies, relative growth prospects and more for our 10 US & EU global pharmaceutical companies.
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