Sales Growth For Multinationals Remains Positive In Q213


BMI View: Although Sanofi's 'disappointing quarter' as well as currency devaluations in some Latin American countries created certain market unease, the sales performance of multinationals remained positive in Q213. The increasing demand for advanced medicines in the region continues to drive innovative drugmakers' revenue growth. However, key factors to multinationals' success in the region, such as intimate relationship with Brazilian authorities and deeper integration with local drugmakers, may become their undoing in long-term. Multinationals will face more fierce generic competition and increasing intervention from local authorities.

Merck & Co

In Q213, revenues generated in Latin America reached US$676mn, accounting for 7.3% of total Merck & Co's sales. It was up by 1% compared with Q212 results. Second-quarter sales benefited from the timing of government purchases in Latin America. Growth in Brazil was generated from new product sales. In Q213, the Minister of Health in Brazil recently announced a national immunization program with Gardasil (HPV vaccine) to begin in 2014. The company also reported approximately US$140mn of losses due to Venezuelan currency devaluation in H113.

Positive Growth Benefited From Government Purchase
Merck & Co Revenue In Latin America (US$mn)

Sanofi

Sanofi has reported a 'frustrating quarter' in Q213, largely due to Brazil's generic drug issues. In Brazil, sales were EUR154mn (US$203mn), affected by underperformance and an adjustment of EUR122mn (US$161mn). Given the impact of Brazil and the year-to-date performance, Sanofi has reduced its 2013 business EPS (earning per share) expectations by 7-10% compared with 2012. 'There's no point in sugar-coating this, this is a quarter where we have disappointed', the company's CEO, Chris Viehbacher, commented. Inventory in Brazil was 'significantly and inappropriately' higher than necessary, resulting in Sanofi recalling expiring stock and appointing new local management. The problems may take 12 to 18 months to reverse, Viehbacher said.

Sales Plunged In Q213
Sanofi's Revenue In Brazil (EURmn)

Roche

In Latin America, the company's pharmaceutical division sales increased by 3% to CHF1.3bn (US$1.4bn) in H113, mainly driven by sales of Avastin (bevacizumab) and Herceptin (trastuzumab), despite pricing pressure and political uncertainties. Its diagnostics division revenue went up by 11%, largely due to strong demand for immunology and tissue tests. In Brazil, H113 sales reached CHF474mn (US$512mn) with 0% growth; for Mexico, sales rose 1% to CHF203mn (US$219mn). The company highlighted opportunities in cervical cancer treatment, stating that the incidence of cervical cancer in Brazil alone is bigger than the US and the EU5 combined. ( BMI reported the company's partnership deal with Brazil previously. [2]) It also booked a CHF62mn (US$67.4mn) loss in H113 due to the currency devaluation in Venezuela.

Baxter

In Q213, Baxter reported its exclusive 20-year partnership in Brazil to provide recombinant factor VIII (rFVIII) for the treatment of hemophilia . The company will be the exclusive provider of Brazil's recombinant FVIII treatment over the next 10 years while it works together on the technology transfer to support development of local manufacturing capacity by Hemobrás. The company expects peak annual sales to exceed US$200mn. [3] In Q213, Baxter submitted the regulatory supplement related to the planned modification at its older Los Angeles plasma fractionation facility, and with the acceptance of this submission by the FDA, the company expects to begin releasing products to Brazil soon.

Johnson & Johnson

In Q213, the company reported sales of Incivo (telaprevir), a treatment for hepatitis C, increased by 71.8% due to the continued rollout, primarily in Latin America.

Pfizer

In Q213, biopharmaceutical revenue declined by 13% in Brazil due to the timing of government purchase of Enbrel (etanercept) in the country; whereas sales rose 5% in Mexico. The company also reported the negative impact of cost containment measures in Colombia.

Novo Nordisk

The company reported strong sales in Brazil. It also launched Tresiba (insulin degludec), the once-daily new-generation insulin with an ultra-long duration of action in Mexico.

Abbott

Abbott expects pharmaceutical division sales in Brazil to accelerate as a result of portfolio expansion and execution of recent tender wins.

Merck KGaA

In Q213, the company reported strong sales in Latin American countries such as Mexico, Chile, Brazil and Venezuela. However, currency devaluation in Brazil, Venezuela and Argentina contributed a significant negative currency impact on the company's regional performance.

Bayer

In Q213, Bayer reported strong currency-adjusted sales in Brazil and Argentina, especially in the consumer care division. Sales of Aleve (naproxen) were particularly strong in Brazil.

Daiichi

Sales of Benicar (olmesartan) increased in Venezuela during Q213.

[1] Business Monitor Online - Industry Trend Analysis - Sanofi's Solid Performance Turns Soft- August 19, 2013.

[ 2 ] Business Monitor Online - Industry Trend Analysis - Government To Distribute Free Herceptin - February 19, 2013.

[ 3 ] Business Monitor Online - Industry Trend Analysis - Government Signs Technology Transfer Agreements With Multinationals- November 05, 2012.

This article is tagged to:
Sector: Pharmaceuticals & Healthcare
Geography: Latin America, Japan