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Tuesday, February 23, 2010

Keeping up with Philadelphia pharma's middle class

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.”

Quotable

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.

 
Posted by Mike Armstrong @ 12:10 PM  Permalink | File Under: Pharma, Biotech | 3 comments
Comments   
  • 0 like this / 0 don't   •   Posted 1:37 PM, 02/23/2010
    Site with detailing the history and beginnings of the Pharmaceutical Industry, as it applies to current industry standards and practices. http://www.cchr.org/#/home
    — White, Rose
  • 0 like this / 0 don't   •   Posted 7:17 AM, 02/24/2010
    This sector of the economy is very exciting as many of those "middle class" will be upper class in the years to come. Love to invest in this area as well and it is so exciting for Philadelphia to have a number of publicly traded companies in the nearby vicinity.
    — thesomersteam
  • 0 like this / 0 don't   •   Posted 7:53 AM, 02/24/2010
    Our dear regional political leaders should be wooing more and more of these energetic plums. Jobs and prestige to say nothing of the quality of employees they employ which, in turn, can help the real estate market.
    — stoneman


3 comments
About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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