Monday, August 12, 2013

US Big Drug Corps 2Q 2013 Earnings Up 4%

I found 14 US Big Drug Corps which generated After-tax Adjusted Earnings of more than $250 mil in either the 2Q 2013 or the 2Q 2012.

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%