SINGAPORE--Wonder where C-suite pharma execs are focused in Asia and the emerging markets? FiercePharma has some ideas, taken from fourth-quarter earnings calls. See below for notable quotes and figures from Novartis ($NVS), Bristol-Myers Squibb ($BMY), Pfizer ($PFE), Abbott Laboratories ($ABT), and Eli Lilly ($LLY).
Joe Jimenez, Novartis CEO
"We had a very good year in emerging markets, up 11%. Those markets now account for over a quarter of our total sales," Jimenez said, speaking specifically about the pharma division he added that even in constant currency the division grew 1% in the fourth quarter in emerging markets. "It's down in US dollars by about 1%, but we absorbed the generic impact of 7 percentage points to be up 1% in constant currencies. That's an accomplishment that I think not many pharma businesses can talk about."
A fellow executive chimed in later to show in word and slides what the growth in emerging markets looked like.
David Epstein, Novartis pharma division head
"Part of the growth story is also on page 38, where you see we made a decision a few years ago to further invest in emerging growth markets. Those emerging growth markets now represent 26% of our business and have grown from a 6% growth rate in 2012 to an 11% growth rate in 2014. Looking forward to the 2015, we would say that growth is likely to be a bit lower, particularly given geopolitical risk and the impact of oil on some of these economies."
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Ian Read, Pfizer Inc., Chairman & CEO
"For our Established business, we will build on our success in 2014 in providing high-value, high-quality, low-cost treatments in emerging markets. We expect to see operational revenue growth of mid-to-high-single-digits in the emerging markets this year, by focusing on opportunities in key growth markets such as China, Brazil, India, Russia and Turkey."
And Read's numbers executive spoke specifically about the rise in China.
Frank D'Amelio, Pfizer Inc., CFO
The company had "7% operational growth in emerging markets, driven by Lipitor mainly in China, as well as Prevnar and Enbrel, which were offset mainly by the unfavorable impact of foreign exchange of approximately $449 million or 3%"
But UBS analyst Marc Goodman wanted more on the Middle Kingdom. How did China perform in the quarter, he asked, and what is Pfizer expecting there in 2015?
Read flipped this query over to the head of the Established Pharma division.
John Young, Pfizer Inc., President Established Pharma
"So we continue to perform strongly in China. I'll comment on the GEP segment, which is the largest segment of our business in China. Overall for the quarter, we had growth of 13%. Overall for the year, we saw growth of around about 18%," Young said.
"We continue to see as we always do in emerging markets quarter to quarter fluctuation, but we continue to be very satisfied by our performance in China. Segments that are strong for us are particularly our cardiovascular franchise, with Lipitor and Norvasc performing strongly. And also a very strong performance from our anti-infectives business."
Bristol Myers Squibb
There was not much from BMS outside of developed markets, but some brief comment on Japan and hepatitis C.
Giovanni Caforio, Bristol-Myers Squibb Co., COO
"Regarding hepatitis C, we had a really good quarter. Generally speaking, our strategy is to focus on difficult-to-treat patients, and the unique medical needs of each market. We made important progress in Japan, with our dual regimen."
The Chicago-based firm is always interesting on emerging markets with the CEO widely ranging over Asia and further afield like a modern-day Marco Polo.
Miles White, Abbott Laboratories, Chairman & CEO
"As you know, recent macroeconomic events have dominated the discussion on Company outlooks for 2015, in particular the significant strengthening of the dollar against almost every currency during the fourth quarter of 2014 and into 2015, as well as the impact of the decline of the price of oil on the global economic outlook," White said, starting out on a somber tone.
But after the downbeat start, he started to note where the company was heading--and it wasn't to Kansas.
"In established pharmaceuticals we have further positioned the division for faster growth. We added CFR Pharmaceuticals which provides the scale, manufacturing, R&D, and product portfolio to establish Abbott as a top 10 pharma company in Latin America."
"We acquired Veropharm positioning Abbott as a top five branded generics company in Russia. Both CFR and Veropharm provide Abbott with in-country manufacturing to bring us closer to our customers, as well as better match our costs with our sales and currency in those regions. And we're on track to close on the sale of the EPD developed markets business in the first quarter, a business that performed above expectations in 2014 and is well positioned to move forward with Mylan."
"Last year in our nutrition business we increased our local presence by investing in our global infrastructure. We opened three new manufacturing plants in China, India, and the U.S. And we partnered with the world's largest dairy cooperative, Fonterra, to invest locally in China's milk supply. These investments are a reflection of the strong underlying demand for our high-quality adult and pediatric products."
He went on in to devices and related products, but the drift was clear--and the executive responsible for counting the cash added a bit of detail.
Tom Freyman, Abbott Laboratories and Executive Vice President of Finance & CFO
"Company sales in emerging markets increased strong double digits on an operational basis in the quarter. Fourth-quarter adjusted gross margin ratio was 56.9% of sales, ahead of our previous guidance, reflecting underlying gross margin improvements across the businesses, as well as the impact of the weaker euro on our manufacturing cost base."
But White had even more to say.
"I think in the last couple of years we've been able to accomplish some pretty unique and unusual acquisitions. I think Veropharm was pretty unusual, particularly given that we were well into it when the Ukraine issue happened and made it more difficult. And I would say I would pat the CFO on the back here for having the presence of mind to do this deal in rubles, so we were not exposed to exchange on that particular deal. I think it's a fabulous deal for us long term in Russia, and that's an important market for us. We anticipated--we didn't wish for the devaluation of the ruble but we were prepared for it."
"So, I think there is a number of places where there is opportunities for us outside the U.S. that aren't necessarily that visible to U.S. investors or U.S. analysts. I know you know that. There is a lot out there that enhances what we are trying to do with the business and where we believe the growth opportunities are and where we can lever the already existing infrastructure we have."
The company has its patent woes to talk about which squeezed out most talk about Asia and emerging markets from Chairman, CEO and President John Lechleiter.
But Phil Johnson of Investor Relations made some brief notes on performance.
"In Japan, pharma revenue decreased 10%, driven by the weaker yen. On a performance basis, our Japanese pharma revenue increased 2%. Growth this quarter was negatively affected by the timing of Cymbalta shipments to our marketing partner Shionogi, as well as by volatility we have seen in customer purchases over the course of 2014, due to increases in the consumption tax. Turning to emerging markets, we saw mid-single-digit performance growth, driven by volume growth of 7%. As a result of the significant negative effect of FX, our reported emerging markets revenue declined 3% versus last year."
And Enrique Conterno, president of Lilly Diabetes, filled in some of the thinking on that crucial market.
"On the premix market, clearly, the premix market has been, in many areas of the world, declining, with the exception of emerging markets, where we see continued growth of this category. When we look at the share performance, Lilly has done fairly well. So we are gaining say in this market, whether it's in U.S., whether it's Europe, Japan, or emerging markets. I am not sure how to comment on whether a once-daily premix would be a strong benefit. We will have to see what that--what the clinical data for that is."
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