BIG PHARMA EARNINGS WATCH: ASTRAZENECA, SANOFI, MERCK, ABBVIE, ELI LILLY & AMGEN

Q2 Earnings Reports Continue to Show Pandemic Price Hikes Profitable for Brand Name Drug Makers

Another round of second quarter earnings reports from brand name drug makers AstraZeneca, Sanofi, Merck, AbbVie, Eli Lilly and Amgen showcase yet again that price hikes and anti-competitive tactics continue to be hugely profitable for Big Pharma.

All six drug makers beat Wall Street expectations after having hiked prices on products in their portfolios during the pandemic, with some of the Big Pharma companies even raising their guidance and profit forecasts for the year, buoyed by particularly strong results.

AstraZeneca

• AstraZeneca topped Wall Street expectations for the quarter and lifted its guidance for the year.
• The company reported second quarter revenue rose 30 percent to $8.2 billion.
• Strong sales were driven by the company’s oncology and respiratory portfolios, which were up 14 and 16 percent, respectively, in the quarter.

Sanofi

• Sanofi bested Wall Street sales and profit estimates – pulling in $10.35 billion in the second quarter.
• Sanofi’s pharmaceutical division posted strong sales – increasing nearly 12 percent year over year.
• Sales of Sanofi’s blockbuster eczema drug Dupixent increased 57 percent in Q2 – notching $1.47 billion.
• The company performed so well that Sanofi raised its profit forecast for the year.

Merck

• Merck beat Wall street earnings and revenue expectations in Q2.
• Strong sales were driven by the company’s prescription drug unit – which posted $9.98 billion in sales for the quarter, a 22 percent increase year over year.
• Sales of Merck’s blockbuster drug cancer Keytruda jumped 23 percent in the quarter to notch $4.2 billion.

AbbVie

• AbbVie reported second-quarter profit and revenue that beat Wall Street expectations.
• The company reported revenues of nearly $14 billion for the quarter, a 33 percent increase year over year.
• Strong sales were driven by blockbuster drug Humira – still the world’s best-selling drug – which notched $5.07 billion in sales in Q2.
• AbbVie’s reported sales for Humira fell six percent in international markets, where it faces competition, while in the U.S. sales increased by seven percent, where the drug is patent protected through 2023.

Eli Lilly

• Eli Lilly reported revenues and sales that beat Wall Street expectations.
• The company notched $6.7 billion in sales for the quarter – up 23 percent year over year.
• Blockbuster diabetes drug Trulicity generated an astounding $1.54 billion in sales – up 25 percent year over year.
• Other drivers include insulin drug Humalog, which raked in $607 million for the quarter.

Amgen

• Amgen reported revenues and sales that topped Wall Street forecasts.
• The company’s revenue rose to $6.53 billion.
• Amgen also revealed on its earnings call that the IRS is seeking $3.6 billion in back pay on taxes from the company for the years 2011, 2012 and 2013. The issue concerns
• Sales were driven by blockbuster plaque psoriasis treatment Otezla – which brought in $534 million in Q2.
• Amgen’s cholesterol drug Repatha also brought in $286 million for the quarter – an eye-popping 43 percent increase year over year.

The new earnings reports come against a backdrop of significant price hikes from the companies during the pandemic. All six drug makers have engaged in price hikes during the pandemic and have a history of engaging in anti-competitive tactics:

AstraZeneca

• The brand name drug maker has hiked prices on at least 19 medications so far this year, in two different batches.
• Last summer, AstraZeneca increased prices on more than 18 different drugs – including on popular cholesterol drug Crestor and blockbuster drug Symbicort.
• The company has hiked prices on products in its portfolio at least three times during the COVID-19 pandemic.

AstraZeneca has a long history of hiking prices on Americans struggling to afford their medications:

• AstraZeneca Was One Of Several Companies To Participate In Big Pharma’s Biennial Price Hikes This Summer – despite the unprecedented economic uncertainty facing millions of Americans grappling with the pandemic – by increasing prices on 18 drugs, including on popular cholesterol drug Crestor and blockbuster drug Symbicort. (Tori Marsh, “Live Updates: July 2020 Drug Price Increases,” GoodRx, 8/3/20)
• In Anticipation Of Generic Competition For Its Blockbuster Anti-Ulcer Drug Prilosec, AstraZeneca, “Introduced And Pushed Doctors To Prescribe” A New Drug “Which Was Only Slightly Chemically Different From Prilosec But Had 13 Years Of Patent Protection Left.” The Report Estimates The One-Year Cost Of This Product Hop To Be Almost $2.4 Billion. “The anti-ulcer drug Prilosec was, at one time, the top drug by sales in the United States. In 2000, before its scheduled patent expiration the following year, Prilosec sales reached $4.1 billion (NIHCM Foundation, 2001). In anticipation of generic competition for its blockbuster product, AstraZeneca, Prilosec’s manufacturer, introduced and pushed doctors to prescribe its new anti-ulcer drug, Nexium, which was only slightly chemically different from Prilosec but had 13 years of patent protection left. A lawsuit alleging that AstraZeneca engaged in anticompetitive behavior with Prilosec and Nexium was dismissed in early 2008 when a district court found that AstraZeneca “did not eliminate consumer choice” (Callan, 2015). But antitrust experts have pointed out that the court’s reasoning ignores “the realities of drug markets,” where a prescription for a single-source brand drug removes the option of a generic version (Carrier and Shadowen, 2016).” (Alex Brill, “The Cost of Brand Drug Product Hopping,” Matrix Global Advisors, 9/20)
• 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)

Sanofi

• Sanofi was among Big Pharma companies to raise prices this July.
• The company kicked off the New Year by raising prices on at least 40 medications.
• Sanofi chose to hike prices on key medications in its portfolio last summer despite the unprecedented economic uncertainty brought on by the COVID-19 pandemic.
• Last spring, Sanofi was caught exploiting charities to boost the company’s bottom line at the expense of taxpayers. In a settlement, Sanofi was ordered to pay the U.S. government nearly $12 million after the company “used a charity that helps cover Medicare patients’ out-of-pocket drug costs as a means to pay them kickbacks to use a high-priced multiple sclerosis drug,” Reuters reports.

Merck

• Already this year Merck has increased prices 20 times, including on blockbuster diabetes medicines Januvia and Janumet – both by five percent.
• The brand name company also raised the price of HIV therapy treatment Insentress by almost five percent earlier this year.
• Last year, Merck hiked prices at least 45 times.

AbbVie

• To kick off the New Year, AbbVie hiked prices on its blockbuster drug Humira, as well as on its autoimmune medicines Skyrizi and Rinvoq and cancer treatment Imbruvica – all by 7.4 percent.
• Price hikes on AbbVie’s Humira were not supported by new clinical evidence and accounted for an unnecessary increase in U.S. drug spending of more than $1.8 billion from 2017-2018 according to ICER.
• Humira’s price has almost doubled since 2012, from about $19,000 to $38,000. AbbVie currently holds over 130 patents on Humira in the United States, blocking competition for up to 39 years.

Eli Lilly

• Eli Lilly rang in the new year with over one dozen price hikes.
• 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 past summer, Eli Lilly increased the price of two of its cancer drugs – Cyramza and Alimta.
• In 2020, Eli Lilly increased prices over a dozen times – including top-selling diabetes drug Trulicity.

Eli Lilly is also 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. And, according to a recent report from the Senate Finance Committee:

• Over The Past Decade, The Three Largest Manufacturers Of Insulin – Novo Nordisk, Sanofi And Eli Lilly – “Aggressively Raised The List Price Of Their Insulin Products Absent Significant Advances In The Efficacy Of The Drugs.” “Sanofi’s long-acting insulin pens, Lantus SoloStar, increased from $303 in 2014 to $404 in 2019. The WAC price of Novo Nordisk’s long-acting insulin pens, Levemir FlexTouch, increased from $303 in May 2014 to approximately $462 in January 2019, representing an increase of $159—or 52%— in a little more than five years. Eli Lilly’s rapid-acting insulin, Humalog 50-50 Kwikpen, had a WAC of $530 in 2017 compared to $323 in 2013—an increase of $207 or 64% in four years. Sanofi’s rapid acting insulin, Apidra Solostar, also increased—from $302 in 2014 to $521 in 2019— while Novo Nordisk’s rapid-acting insulin, Novolog FlexPen, rose from $324 in 2013 to $558 in 2018, representing a more than 70% WAC price hike for both companies during this time period.” (Staff Report, “Insulin: Examining The Factors Driving The Rising Cost Of A Century Old Drug,” United States Senate Finance Committee, 1/14/21)
• Insulin R&D Spending Was A Fraction Of Manufacturers’ Revenue And Sales And Marketing Expenses. “Eli Lilly reported spending $395 million on R&D costs for Humalog, Humulin, and Basaglar between 2014 and 2018, during which time the company spent nearly $1.5 billion on sales and marketing expenses for its insulins. These three drugs generated $22.4 billion in revenue during that period. Similarly, Sanofi reported net sales of nearly ‚Ǩ31 billion (approximately $37 billion based on current currency conversion rates)5 between 2014 and 2018 for its five insulin products, during which time the company reported spending $902 million on insulin R&D. Novo Nordisk failed to provide requested R&D spending information to the Committee.” (Staff Report, “Insulin: Examining The Factors Driving The Rising Cost Of A Century Old Drug,” United States Senate Finance Committee, 1/14/21)

Amgen

• Already this year, Amgen has hiked prices 11 times – including on popular drugs Enbrel and Otezla – by an average of more than seven percent.
• A recent House Committee on Oversight report found that Amgen hiked prices of blockbuster drugs Enbrel and Sensipar in order to meet revenue targets.
• Price hikes on the company’s cancer drug Neulasta were not supported by new clinical evidence and accounted for an unnecessary increase in U.S. drug spending of nearly $500 million from 2017-2018 according to ICER.

Read more on Q2 earnings from Johnson & Johnson, Novartis, Roche HERE.

Read more on Q2 earnings from Pfizer, Glaxo Smith Kline and Bristol Myers Squibb HERE.

Stay tuned next week as we round out our coverage of Q2 earnings announcements from Big Pharma.

Learn more on solutions to hold Big Pharma accountable and lower prescription drug prices HERE.