There is a middle class when it comes to the pharmaceutical sector.
Like the demographic version, the pharmaceutical middle class, with between $1 billion and $10 billion in annual sales, has some of the headaches of the wealthy (Pfizer, Merck) as well as the poor (any biotech firm without an approved product).
Those headaches include generic competition, meager research results, and regulatory setbacks.
I put three local companies in that middle class: Shire P.L.C. (2009 revenues of $3.01 billion); Cephalon Inc. (2009 revenues of $2.19 billion); and Endo Pharmaceuticals Holdings Inc., which on Monday said revenues hit $1.46 billion last year.
All three are identified with certain types of drugs. Shire makes Adderall XR, for attention-deficit hyperactivity disorder. Cephalon is known for its Provigil and Nuvigil sleep-disorder drugs. Endo produces the Lidoderm and Percocet pain medications.
All have been on the acquisition trail trying to diversify their product mix and geographic footprint.
Endo bought Indevus Pharmaceuticals Inc. last year to add its urology and oncology drugs. On Feb. 1, Cephalon agreed to buy Mepha AG, a Swiss generic-drug maker.
As for Shire, its purchase of New River Pharmaceuticals in 2007 helped defend its ADHD franchise. Last week, Shire said 2009 sales of Adderall XR had plunged 43 percent to $626.5 million, hurt by generic substitutes. Through New River, Shire’s new ADHD drug, called Vyvanse, had sales of $504.7 million, up 58 percent.
However, the big difference between the American and pharmaceutical middle classes is one of confidence.
Endo CEO Dave Holveck told analysts he is “confident that we will sign multiple deals this year to enhance our near-term revenues and add new development projects to our pipeline.”
Executives are plagued by the thought of what will happen if they build it and no one comes. Until that question fades, many will neither build nor hire.
- Mark Zandi, chief economist of Moody’s Economy.com, in prepared remarks scheduled to be presented at a hearing Tuesday afternoon before the House Financial Services Committee.