FiercePharmaAsia combs earnings calls by major drug companies for notable and quotable nuggets on emerging markets and Asia to track the latest sales trends and insight into business outlooks in markets as diverse as China, India and Japan to Southeast Asia.
For the first quarter of the year, see remarks by top executives from Eli Lilly & Co. ($LLY) and AbbVie ($ABBV), with more to come.
John C. Lechleiter, chairman, CEO and president of Eli Lilly, was not on the April 23 earnings call. But Derica Rice, chief financial officer took on the analysts with a little help from colleagues.
|Eli Lilly CFO Derica Rice|
Of note for Asia was the emphasis on three deals with two in the region, including a deal that licensed poziotinib for treating several types of cancer to U.S.-based Spectrum Pharmaceuticals ($SPPI) to market the oral HER-inhibitor globally except in China and South Korea.
"On the business development front, we announced three deals," Rice said.
"The first was an agreement with Hanmi for the development and commercialization of Hanmi's oral BTK inhibitor for the treatment of autoimmune and other diseases. Lilly will have worldwide rights, excluding China, Hong Kong, Taiwan, and Korea."
"The second was a collaboration with Innovent for the development and commercialization in China for three investigational cancer treatments. In addition, Lilly will be responsible for the development and commercialization outside of China for a preclinical immuno-oncology molecule and for up to three preclinical bi-specific immuno-oncology molecules from Innovent."
The third deal as we well know was announced in April was with Bristol-Myers Squibb ($BMS) for the transfer back to Lilly of Erbitux' commercial rights in North America.
Lilly is closely watched by biotechnology funds in Asia, particularly China, for its interest in licensing and funding via Lilly Asian Ventures.
Rice talked a bit about oncology generally, and mentioned prospects in Japan.
"After receiving a priority review, Cyramza was approved in Japan as a treatment for patients with unresectable advanced or recurrent gastric cancer. Given the regulatory timelines for pricing in access decisions, launch is expected midyear."
Phil Johnson, who handled investor relations, the filled in some of the international numbers, noting Japan could use a pickup.
"In Japan, Pharma revenue decreased 23% with half of the decline coming from the weaker yen. On a performance basis, our Japanese Pharma revenue decreased 11%," Johnson said.
"You may recall that we experienced substantial wholesaler buying in Q1 2014 in advance of an increase in the local consumption tax. Adjusting for the increased buying we saw last year, our Pharma revenue grew about 9% on a performance basis driven by volume."
He then said Emerging Markets saw mid-single-digit performance growth driven by volume growth of 7%.
But foreign exchange woes ruined the party.
"As a result of the significant negative effect of FX, our reported Emerging Markets revenue declined 4% versus last year. Our Pharma revenue in China grew 6% with nearly all of that growth coming from volume."
Turning back to oncology, Sue Mahony, president of Lilly Oncology, mentioned the prospects again in Japan for the Alimta patent.
"In Japan, the JPO hearing was heard in February. And again, we're expecting to get a determinant on that case again sometime later this year," she said.
"In the US, as you're aware, the District Court has ruled in Lilly's favor on validity. The case has gone back to the court regarding infringement. That case is now being heard on May 28 of this year."
|AbbVie CEO Richard Gonzalez|
Richard Gonzalez, AbbVie chairman and CEO, was unusually expansive about the international operations this quarter in the April 23 call, likely because that's where the money is for Humira.
He even made a point to note--in real hard-core management smack-down speak--why the company is a more international biotech than Amgen ($AMGN), Biogen ($BIIB) and Celgene ($CELG).
"What you'd see is that our gross margin profile is, on average, 6 points lower, and that's due to differences in the product mix," Gonzalez said.
"Our R&D profile is approximately 4 points lower. Our SG&A profile is approximately 5 points higher. That is driven by geographic distribution of our revenues, especially the percentage of revenues that come from international sales. As you probably know, it's about 45% for us and many biotech companies have 70% of their revenues coming from the US."
He also said the threat of biosimilars to Humira is overblown in some respects because the cascade of regulatory approvals needed for such a complex product alone will take plenty of time.
Humira sales and profit contributions come from a broad geographic footprint, with about 40% of its sales coming from outside the United States," he said.
"Humira has an unparalleled breadth of indications and we use a unique selling model for Humira. We utilize specialized and dedicated sales organizations for all major indications. We manage and invest in Humira to maximize its short- and its long-term value to the Company and to our shareholders."
That intriguing nugget was, thankfully, filled in by Bill Chase, executive vice president of finance and chief financial officer.
"International Humira sales grew 14.8% on an operational basis, excluding a 14.6% unfavorable impact from foreign exchange," Chase said.
"As occurs periodically, the first quarter was favorably impacted by the timing of shipments in select markets. For the full year 2015, we continue to expect global Humira sales growth in the mid-teens on an operational basis."
"Internationally, we have been able to secure reimbursement in many markets faster than we had originally anticipated. As a result, as Rick indicated, we expect a higher mix of international sales this year than originally forecasted. Globally, we continue to expect an annualized run rate of more than $3 billion in sales by the end of 2015."
And Laura Schumacher, executive vice president for Business Development, External Affairs & General Counsel, said that any company looking to take on AbbVie abroad on biosimilars better know the lay of the land.
"With respect to the IP, the patents that I am talking about broadly are global patents," she said.
"We have global patents covering manufacturing and process ... We have patents pending outside the U.S. right now. Those patents have not issued yet. But we think the portfolio we have is very broad and we think we will have some protection outside the United States as far as, certainly right now, manufacturing process enformulation."
Finally, Gonzalez left no doubt that Humira will not go gently into that good night from competition anywhere.
"What I would tell you on the Humira situation--it is not the launch of a bio-similar. Obviously, we have a strategy in place that we believe will allow us to continue to drive strong performance out of Humira post a launch of a bio-similar," he said.
"But what I would tell you is, we obviously have contingency plans that we have in place that we would pull the trigger on. Remember, it's going to be not just one single launch, right? Because Humira is sold all around the world. There will be different countries. Obviously the U.S. is a significant part of that, and the major European countries are another significant part of it. But we would be evaluating every single country on an ongoing basis and we would make a determination."