CHICAGO, Nov. 20, 2014 /PRNewswire/ -- Today, Zacks Equity Research discusses the Pharma, including Mylan (Nasdaq:MYL-Free Report), Sanofi (NYSE:SNY-Free Report), Amgen (Nasdaq:AMGN-Free Report), Biogen (Nasdaq:BIIB-Free Report) and Actavis (NYSE:ACT-Free Report).
The worst of the patent cliff is over for the pharma sector, which is slowly but steadily recovering from the impact of genericization. Many companies that had been struggling to post growth in the face of genericization over the past few years are now on the recovery path. New products should start contributing significantly to results and increased pipeline visibility and appropriate utilization of cash should increase confidence in the sector.
So far in 2014, about 34 new molecular entities and Biologics License Applications were approved. Some important product approvals so far this year include:
Emerging Markets and Biosimilars
Another trend seen in the pharma sector is a focus on emerging markets. Companies like Mylan (Nasdaq:MYL-Free Report) and Sanofi (NYSE:SNY-Free Report) are all looking to expand their presence in India, China, Brazil and other emerging markets.
However, while higher demand for medicines, government initiatives for healthcare, new patient population and increasing use of generics should help drive demand, we point out that emerging markets are also not immune to genericization. Moreover, investigations into bribery charges in China could put a lid on near-term growth.
We are also seeing several companies like Amgen (Nasdaq:AMGN-Free Report), Biogen (Nasdaq:BIIB-Free Report) and Actavis (NYSE:ACT-Free Report) targeting the highly lucrative market for biosimilars (generic versions of biologics).
The Q3 earnings season is winding down with 94.2% of medical companies releasing their results. So far, the earnings "beat ratio" (percentage of companies coming out with positive surprises) is 75.5%, while the revenue "beat ratio" is 79.6%. Total earnings grew 15.4% compared to 15.8% in the second quarter, while total revenue improved 12.2% in the quarter compared to 12.4% in the second quarter. Earnings growth was driven not just by cost-cutting measures but also by healthy top-line gains.
Looking at consensus earnings expectations for the fourth quarter, earnings are expected to grow 16.3% and revenues 8.9%. New product sales should pick up significantly going forward.
Overall, 2014 earnings are expected to grow 14.7% and revenues 9.3%. For a detailed look at the earnings outlook for the Medical and other sectors, please check our Zacks Earnings Trends report.
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