Stockwatch: Limited Acquisition Headroom At Specialty Pharma
Debt-fueled acquisitions helped Teva, Shire and Allergan report well-received fourth-quarter earnings. But sector circumstances have changed since 2016 and the ability to grow by debt-funded acquisition is now severely restricted.
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After most of the big pharmaceutical companies reported their full-year 2019 financial results, the second month of earnings season brings the long tail of smaller biotech companies and the generic pharmaceutical companies. There is more than one uncomfortable parallel from the former in the reports of the latter.
Baxalta's hemophilia franchise immediately becomes Shire's top seller, but the specialty firm enjoyed sales growth across its business areas. Meanwhile, the launch of Xiidra is off to an impressive start in market share and patient access.
Allergan’s fourth quarter earnings came in above analyst consensus, making up for the third quarter when revenue was below projections. The company is confident that it will experience continued sales growth in 2017, despite competitive pressures for key products.