These 14 Drug Corps generated Total Adjusted Earnings growth of 4% in the 2Q 2013 over the 2Q 2012.
It is helpful to break down these earnings by Drug Sector.
Three of the four Drug Sectors had blow-out total earnings growth in the 2Q 2013.....Drug Retailers up 23%, Drug Wholesalers up 21%, and Other Drug Manufacturers up 20%.
On the other hand, the six Big Pharma Manufacturers experienced a 1% Total Adjusted Earnings decline in the 2Q 2013. But this 1% earnings decline is very misleading. These Big Pharma Drug Manufacturers make continuing very heavy investments in Research and Development. US GAAP requires these R&D expenditures to be immediately charged to earnings, even though in the aggregate, these R&D expenditures reap substantial future earnings for many years, due to the related long patent lives.
In the 2Q 2013, the total R&D Expenditures of these 6 Big Pharma Corps were $8,567 mil, which was 61% of the $14,126 mil of Total Adjusted Earnings. The major R&D spenders relative to Adjusted Earnings in the 2Q 2013 were Bristol Myers with $951 mil of R&D spending vs $730 mil of Earnings, Eli Lilly with $1,330 mil of R&D spending as compared with $1,255 mil of Earnings, and Merck with $2,101 mil of R&D spending vs. $2,530 mil of Adjusted Earnings.
When you factor in the impact of the key R&D investments made, Big Pharma did very well in real earnings in the 2Q 2013.
When I put this altogether, I have to conclude that the Affordable Care Act has been extremely beneficial economically to all of the above 14 Big Drug Corps. And this very positive impact will continue far into the future.
Below here are the adjusted earnings of these 14 US Big Drug Corps for the 2Q 2013 and for the comparable 2Q 2012:
| 2Q 2013 | 2Q 2012 | |||
| Adjusted | Adjusted | |||
| Net | Net | |||
| Income | Income | |||
| From | From | |||
| Continuing | Continuing | Increase | Increase | |
| Operations | Operations | (Decrease) | (Decrease) | |
| mil $s | mil $s | Amount | % | |
| US Big Drug Corps | ||||
| Big Pharma Manufacturers | ||||
| Johnson and Johnson | 4,289 | 3,644 | 645 | 18% |
| Pfizer | 4,003 | 4,449 | (446) | -10% |
| Merck | 2,530 | 3,227 | (697) | -22% |
| AbbVie | 1,319 | 1,267 | 52 | 4% |
| Eli Lilly | 1,255 | 924 | 331 | 36% |
| Bristol Myers Squibb | 730 | 808 | (78) | -10% |
| Total all 6 Big Pharma | 14,126 | 14,319 | (193) | -1% |
| Other Large Drug Manufacturers | ||||
| Celgene | 653 | 545 | 108 | 20% |
| Allergan | 369 | 324 | 45 | 14% |
| Actavis | 270 | 181 | 89 | 49% |
| Mylan | 269 | 254 | 15 | 6% |
| Total all 3 | 1,561 | 1,304 | 257 | 20% |
| Drug Wholesalers | ||||
| McKesson | 481 | 370 | 111 | 30% |
| Cardinal Health | 274 | 255 | 19 | 7% |
| Total Both | 755 | 625 | 130 | 21% |
| Drug Retailers | ||||
| CVS Caremark | 1,197 | 1,042 | 155 | 15% |
| Express Scripts | 928 | 717 | 211 | 29% |
| Walgreen's | 812 | 628 | 184 | 29% |
| Total all 3 | 2,937 | 2,387 | 550 | 23% |
| Grand Total all 14 US Big Drug Corps | 19,379 | 18,635 | 744 | 4% |
