Who are the most profitable companies in healthcare? Drug companies, with 7 out of 10 slots on a ranking by profit margin. Who are the most profitable drug companies? You might scratch your heads at all but a couple of names.
First, we have to take the top-ranked company with a grain of salt. AMAG Pharmaceuticals, a small drugmaker that built its fortunes on an anemia drug called Feraheme, came in first place in the ranking of healthcare companies by profit margin, compiled by Motley Fool. For 2014, AMAG's profit margin amounted to 109%. That's because of a one-time tax benefit that pushed net income to $143 million on just $124 million in sales. Needless to say, not a repeatable feat. AMAG's most recent claim to fame was its $1.25 billion buyout of bankrupt Lumara Health last fall.
Next in line? PDL BioPharma, which typically ranks near the top of pharma, margin-wise. Its 2014 margin amounted to about 66%, Motley Fool says. It's not a typical drugmaker, though; it makes most of its money on royalties, with 71% of 2014 revenue coming from drugs licensed to Roche's ($RHHBY) Genentech unit.
The third-ranking company is more interesting: It, too, is a tiny business, relatively speaking, with just $57.4 million in first-quarter revenue. But Enanta Pharmaceuticals' success depends on a very big disease--hepatitis C--and its revenue right now depends on AbbVie ($ABBV), which owes Enanta milestones and royalties on the newly approved cocktail Viekira Pak. For instance, $50 million of Enanta's Q1 revenue was a milestone payment for European approval of that treatment. Its 2014 profit margin amounted to 65%.
Four other small drugmakers are on the list--POZEN ($POZN), at a 61% margin; the generics maker Taro Pharmaceutical ($TARO), at 52%; ANI Pharmaceuticals ($ANIP) with 51%; and Vanda Pharmaceuticals ($VNDA) at 40%.
In fact, the only two pharma companies of any size whose margins hit such heights were these: Shire ($SHPG), which specializes in rare diseases, gastrointestinal drugs and ADHD meds, and is aiming for $10 billion in sales by 2020. And Gilead Sciences ($GILD), with its hugely successful hep C franchise and its stable of high-performing HIV drugs. Shire's margin amounted to 56% last year, while Gilead's stood at 48%.
- read the Motley Fool piece
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