Competition in Rheumatoid Arthritis Market Weighs on UCB Earnings
Belgian drug firm UCB Pharma announced today revenues growth of 1% to EUR3.2 billion (USD4.2 billion) in its full-year 2011 results. Although this was somewhat higher than anticipated, sales of key growth driver Cimzia (certolizumab) were somewhat below expectations due to the competitive rheumatoid arthritis market.
IHS Global Insight Perspective
UCB is in a heavy phase of investment in research and development, conducting seven Phase III trials. This has placed pressure on profits, where recurring earnings before interest and taxes were down 7% to EUR435 million (USD580 million).
Still, UCB can look at a relatively strong commercial profile for its core products, including Cimzia (certolizumab; up 58%), Vimpat (lacosamide; up 65%) and Neupro (rotigotine; up 16%), but its stake in the Effexor XR (venlafaxine) franchise is being decimated by generic entry.
UCB's longer-term outlook will be driven by further clinical development of Cimzia and Vimpat, Phase III assets epratuzumab in lupus and brivaracetam in epilepsy, as well as its sclerostin antibody CDP-7851/AMG-785, which has had positive Phase II results.
Belgian drug firm UCB today presented its financial results for 2011, with overall revenues inching up 1% to EUR3.2 billion (USD4.2 billion) and overall earnings before interest, tax, depreciation and amortisation (EBITDA) declining 7% to EUR683 million. Earnings were primarily hit by a substantive increase in research and development (R&D) spend, which is currently accounting for around a quarter of net sales and grew by 11% in 2011 in light of increased investment in its pipeline assets. Revenue growth reflects the ongoing transition from UCB's older assets in allergy, epilepsy and ulcer treatment towards more high-value innovative compounds such as Cimzia (certolizumab).
UCB Pharma Financial Results (2011)
Results (EUR Mil.)
General and administrative spend
EBIT / operating profit
Adjusted net profit
Still, Cimzia results came slightly below expectations due to the intense competition in the rheumatoid arthritis market, particularly in North America, were sales were up 36% to EUR226 million. Sales in the more nascent European market for Cimzia were up 160%. Sales of Keppra (levetiracetam) were relatively stable due to erosion of sales in North America where it is facing post-patent competition (sales down 18%). A similar story was told for Xyzal (levocetirizine), where generic competition is hitting its profile in Europe.
UCB Pharma Product Sales (2011)
Sales (EUR Mil.)
Metadate CD (methylphenidate)
Tussionex (chlorpheniramine / hydrocodone)
Outlook and Implications
UCB announced that it is expecting revenues of around EUR3.1 billion for 2012, a slight decline, with recurring EBITDA at around EUR630-600 million. Although UCB is seeking to curtail its R&D spend as a percentage of its overall sales (from 24% to 22-23%), the company's longer-term outlook will be driven by further clinical development of Cimzia and Vimpat, Phase III assets epratuzumab in lupus and brivaracetam in epilepsy, as well as its sclerostin antibody CDP-7851/AMG-785, which has had positive Phase II results. Brivaracetam results as an adjunctive therapy in partial onset seizures in adults with epilepsy are expected in the first half of 2013, and epratuzumab results in systemic lupus erythematosus are expected in the first half of 2014.
With a unique mechanism of action, CDP-7851 is being positioned in the competitive post-menopausal osteoporosis market, and UCB is expecting to commence Phase III trials in 2012. Amgen and UCB are also collaborating in a series of other bone-related indications for the drug. Elsewhere, UCB is expected to announce Phase II results for anti-IL6 (olokizumab) in rheumatoid arthritis in Q3 2012.
- Indian government releases DPCO 2013, expanding price controls to 652 drugs
- Key US data releases and events
- Budget 2014: US administration signals greater willingness to compromise
- Mercedes-Benz unveils important new S-Class
- Kremlin power struggle becomes evident as influential Russian political ideologue resigns
- GDP, inflation, retail sales, public finances, and Bank of England minutes all feature in UK Economic Week starting 20 May
- Consumer spending and export recovery drive Japan's GDP growth in Q1
- Global Economic Impact of the Japanese Earthquake, Tsunami, and Nuclear Disaster
- Slow start to 2013 highlights ongoing economic challenges in Vietnam
- Chinese vehicle sales and production rise to over 2 mil. units in March, Q1 sales up 13.2% y/y – CAAM