CHICAGO, Dec. 29, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Pharma & Biotech, including Vertex Pharma (Nasdaq: VRTX), Human Genome Sciences Inc. (Nasdaq: HGSI), Biogen Idec (Nasdaq: BIIB) and Perrigo Company (Nasdaq: PRGO).
A synopsis of today's Industry Outlook is presented below. The full article can be read at
With 2011 coming to an end, the pharmaceutical industry continues to face challenges like sluggish prescription trends, EU pricing pressure, intensifying generic competition, pipeline failures and limited late-stage catalysts. The next five years are expected to reflect a significant imbalance between new product introductions and patent losses. All these factors will lead to a slowdown in global pharmaceutical market growth in the next five years, with major revenue-generating drugs like Lipitor, Plavix, Lexapro and Zyprexa losing exclusivity.
In fact, by the end of 2011, drugs worth more than a total of $30 billion will lose patent protection. This includes drugs like Lipitor, Zyprexa and Levaquin. The effect of the genericization of these products will be felt mostly in 2012, which will be a challenging year for several companies. At the same time, new products are not expected to generate the same level of sales as products losing patent protection.
Moreover, the government is exploring options which will help increase the availability of generics. Recently, the Obama administration announced that it is looking to implement a proposal under which the exclusivity period for biologics will be cut down by 5 years, thereby allowing generics to enter the market sooner. The government is looking to bring this proposal into effect from 2012.
We continue to have a Neutral outlook on large-cap pharma stocks (Zacks #3 Rank). While the companies will continue to face challenges like pricing pressure and genericization, growth in emerging markets and product approvals could help reduce the impact.
About 35 new molecular entities have been approved by the FDA up to mid-November 2011. Important product approvals include Johnson & Johnson's prostate cancer therapy, Zytiga, Merck's hepatitis C virus (HCV) treatment, Victrelis, Bristol-Myers' melanoma treatment, Yervoy, AstraZeneca's Brilinta, Vertex Pharma's (Nasdaq: VRTX) HCV treatment, Incivek, Pfizer's lung cancer treatment, Xalkori, and Glaxo/Human Genome Sciences Inc.'s (Nasdaq: HGSI) lupus drug Benlysta, among others.
In the biotech space, we are positive on Biogen Idec (Nasdaq: BIIB). Biogen started 2011 on a strong note with revenues being driven by Tysabri and Avonex. Earnings estimates for Biogen have been increasing based on continued strong performance of the multiple sclerosis franchise. Longer term, we are optimistic on BG-12, the company's oral multiple sclerosis candidate.
We currently have an Outperform recommendation on Perrigo Company (Nasdaq: PRGO) -- we believe Perrigo's strong position in the brand OTC pharmaceutical market and growing generics and API businesses will help it deliver solid top- and bottom-line growth in the coming years. Perrigo also has a very strong and impressive pipeline which could drive growth in fiscal 2012 and beyond.
In spite of a Neutral recommendation on Bristol-Myers, we are positive on the stock. 2011 has been a fruitful year for Bristol-Myers so far, with many key drugs getting approved. Growth in the coming quarters is expected to be driven by new product launches and acquisitions and deals.
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