Big Pharma Earnings Watch: AstraZeneca & Eli Lilly

Brand Name Drug Companies See Soaring Profits After Hiking Prices

Today, brand name drug giants AstraZeneca and Eli Lilly announced rising profits for the second quarter of 2020 – topping analysts’ expectations.

AstraZeneca

• AstraZeneca reported a net profit of $756 million, up from $130 million for the same period a year earlier.
• Sales rose eight percent to $6.28 billion – beating analysts’ expectations.
• Sales were driven by asthma medication Symbicort and cancer drug Tagrisso.

• The company’s profit climbed a $10 million compared to the same quarter last year.
• Earnings per share rose 26 percent – surpassing analysts’ expectations.
• The company’s boosted profits were led by top-selling diabetes drug Trulicity. Sales of the drug rose 20 percent to $1.23 billion, again beating analysts’ expectations.

• AstraZeneca was one of several companies to participate in Big Pharma’s biennial price hikes this month – despite the unprecedented economic uncertainty facing millions of Americans grappling with the pandemic – by increasing prices on 16 drugs, including on popular cholesterol drug Crestor and blockbuster drug Symbicort.
• In 2019, AstraZeneca hiked the price of its popular heartburn medication, Prilosec, by five percent.

• As AstraZeneca Faced Generic Competition To Its High Cholesterol Drug Crestor, Its “Price Was Increased Several Times Before The Generic Came Out … Including By About 15 Percent Right Before.” “AstraZeneca’s AZN, -0.08% drug Crestor, another of the drugs featured in the report, is a popular but expensive drug that treats high cholesterol. In 2016, when the drug first got a new generic rival, the branded product cost about $300 a month without insurance coverage. The price was increased several times before the generic came out … including by about 15% right before. (AstraZeneca said it could not comment because it was not involved in the study.)” (Emma Court, “Big Pharma Games The System To Make Generic Drugs More Expensive,” MarketWatch, 8/3/18)
• AstraZeneca’s Pricing Strategy Served To Create “A New, Higher Baseline Price When The Generic Hits The Market.” (Tori Marsh, “Prices For Brand Drugs Spike Before A Generic Is Released. Here’s Why.,” GoodRx, 7/27/18)
• After Increasing Drug Prices By As Much As Nine Percent, On A 2018 Earnings Call, Soriot Insisted The Company Was “Sensitive” To Drug Pricing Concerns And Said It Had Raised “Wholesale Prices Earlier [That] Year By ‘Very, Very Modest’ Amounts.” “During an earnings conference call, the AstraZeneca chief executive disclosed the company would not raise prices in the U.S. for the rest of year. Other drug makers have taken the same step in response to pressure from the Trump administration, but he insisted this was ‘our plan … all along’ … He maintained AstraZeneca was sensitive to the problem by raising wholesale prices earlier this year by ‘very, very modest’ amounts, ‘between 1 and 3 percent’ which, he said, was ‘in line with inflation.’” (Ed Silverman, “When Modest Is Actually Excessive: AstraZeneca Spins Its Price Hikes,” STAT News, 7/26/18)

• In the first week of July, Eli Lilly was among Big Pharma giants that announced new price hikes despite the unprecedented economic uncertainty facing millions of Americans grappling with the pandemic.
• This summer, Eli Lilly increased the price of two of its cancer drugs – Cyramza and Alimta.
• This year, Eli Lilly increased prices over a dozen times – including top-selling diabetes drug Trulicity.
• Eli Lilly is one of three companies that control 99 percent of the insulin market. In 1996, a 10-milliliter vial of Humalog cost $21, but today, the same vial costs patients $275.

Follow along as we continue to monitor second quarter earnings announcements from brand name drug companies. Check out the key takeaways from Q2 earnings calls from Sanofi, Pfizer, Amgen, Novartis, and Johnson & Johnson HERE, HERE, HERE and HERE.