BIG PHARMA EARNINGS WATCH: NOVARTIS, ELI LILLY & ROCHE

Trio of Big Pharma Firms Bank Q1 Profits Driven By Price Hikes

New first quarter earnings reports from brand name drug makers Novartis, Eli Lilly, and Roche demonstrate yet again that price-hikes and anti-competitive behavior continue to drive big time profits for Big Pharma companies.

Novartis

• Net sales for the drug maker hit $12.4 billion in Q1, up year over year.
• Novartis reported $2.06 billion in net profit for the quarter.
• Strong sales were driven by blockbuster drug Zolgensma – which notched first quarter sales of $319 million, a 26 percent increase over the last quarter and an 88 percent increase year over year.

• The company clocked $6.88 billion in revenue for the quarter – up 16 percent year over year.
• Blockbuster diabetes drug Trulicity generated an astounding $1.45 billion in sales – up 18 percent year over year.
• Other key growth products include cancer drugs Verzenio and Cyramza, and diabetes drug Jardiance.

• Roche reported sales of $16.2 billion for the first quarter.
• Strong sales were driven by the company’s new medicines division, which generated sales of $5.6 billion – a 20 percent increase in Q1.
• Key growth drivers for the company included multiple sclerosis drugs Ocrevus, hemophilia medication Hemlibra and cancer drug Tecentriq.

• The brand name giant rang in the 2021 New Year by hiking prices on nearly 20 prescription drugs.
• Novartis increased the price of chemotherapy treatment Jakafi this summer, during the height of the coronavirus pandemic.
• Novartis increased prices over 30 times in 2020, including seven percent hikes each on blockbuster drugs Cosentyx and Entresto.
• Novartis increased prices at least 57 times in 2019 by an average of 6.3 percent.
• Novartis hiked the prices of Cosentyx and Entresto in 2019 by a staggering 10 percent each.
• At the same time, Zolgensma, a drug used to treat spinal muscular atrophy remains the world’s most expensive drug, at $2.13 million per patient.

• “Since Launching A 400 Mg Tablet Of Gleevec In 2003, Novartis Has Raised The Price Of The Drug 22 Times.” “A yearly course of Gleevec is priced at more than $123,000 today compared to just under $25,000 in 2003, an increase of more than 395%. Novartis raised the price of Gleevec steadily—and at a steeper rate—as it approached its loss of primary patent exclusivity in early 2016. Between 2010 and 2015, Novartis raised the price of Gleevec 12 times. In 2013 alone, the price increased by 20%.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

• • “Due To Gleevec Price Increases, From 2009 To 2019, Novartis Collected Nearly $14.8 Billion In U.S. Net Revenue For The Drug, With U.S. Net Revenue For Gleevec Increasing From $1 Billion In 2009 To More Than $2.5 Billion In 2015.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

• “Novartis Used Several Anticompetitive Tactics To Delay Generic Competition And Maintain Its Profits.” “First, Novartis undertook regulatory steps to extend its primary base compound patent on Gleevec for 26 months, from May 2013 to July 2015. Novartis also engaged in a practice known as ‘pay for delay,’ where the company struck a deal with the first generic entrant to delay entry of the generic by six months. Although the generic company had initially announced that it would price its generic 30% below the price of Gleevec, the generic company ultimately entered the market at a price just 6.4% lower than Gleevec’s price. Novartis executives hailed this high generic price in an email: “That’s good news.” Experts estimate that these strategies—a six-month delay for generic entry and then a six-month duopoly—resulted in $700 million in excess costs to payers in the one-year period from 2015 to 2016.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

• 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.

• 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)

• As sales have climbed, Roche has repeatedly hiked prices on the products in its portfolio.
• In the first week of the 2020, Roche hiked prices on 11 drugs.
• Blockbuster cancer drug Perjeta was named one of the top 25 drugs pushing costs up in Oregon.
• A report released in late 2019 found that Roche’s price hikes on the popular drug Rituxan were not supported by innovation or improvements and cost U.S. taxpayers $806 million.

Stay tuned this week as we continue to monitor Q1 earnings announcements from Big Pharma. Check out some key takeaways from the first round of earnings call last week HERE.