Shire confident in hemophilia despite looming pricing challenge
- Despite signs U.S. pharmacy benefit managers (PBMs) plan to look more closely at hemophilia products, Shire CEO Flemming Ornskov remains optimistic that new restrictions will have only a "limited" impact on the Irish pharma's business.
- Ornskov said he did not expect either United Healthcare or Express Scripts to force patients currently taking hemophilia drugs from Shire to switch to drugs made by other competitors, underpinning his confidence in the outlook for the portfolio.
- Shire is in the midst of integrating Baxalta after closing the $32 billion acquisition in June. The deal added a hematology franchise which pulled in $884 million in sales during the third quarter. Overall revenues more than doubled to $3.4 billion due to the addition of Baxalta products and double-digit legacy growth.
"We live in an environment, certainly during a presidential campaign, where price is in a high focus," Ornskov said on a media call Tuesday.
"We can expect for all our categories, not just hemophilia, tighter management [from PBMs]. But we have the programs in place to make sure this does not affect our patients and has limited impact on our overall business."
Express Scripts, a key PBM in the U.S. and frequent critic of pharma pricing, indicated on Monday it would seek to more tightly manage costs for hemophilia medicines, according to Reuters.
Despite Ornskov's confidence, Shire stock fell in early trading Tuesday as the company cut its GAAP earnings per American Depository Share (ADS) to between a $1.10 loss and a $0.70 loss. The company said higher costs related to the integration of Baxalta, an in-licensing deal with Pfizer and facility closures were responsible for the downgrade.
Non-GAAP earnings per ADS guidance remained unchanged at between $12.70 and $13.10.
Shire expects integrating Baxalta will result in $700 million in cost synergies in the third year out from closing the deal. Company executives, speaking on Tuesday's call, said the integration costs remained as expected but were more accelerated in this quarter.
"We continue to reiterate that what we have set out in the non-GAAP guidance we are on track to meet. This quarter was just a transition to meeting those targets," Ornskov said.
In a bright spot, Shire reported a strong launch of its dry-eye disease drug Xiidra (lifitegrast ophthalmic solution), which came on the market in late August. Sales totaled $14 million in the third quarter, principally due to initial launch stocking.
Through October 21, Xiidra has captured 16% of the market, with nearly 65,000 prescriptions written so far.
"I think, by any measure of any comparative product, whether you look at Restasis' initial launch many years ago or you look at other product launches, this is a very strong launch," Ornskov said.
Shire believes Xiidra could reach $1 billion in annual sales by 2020.
Overall, integration and acquisition costs offset higher product sales, leading to a nearly $406 million operating loss in the third quarter.
- Shire Earnings release
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