As the pharma industry has come under the lens for its pricing, Celgene reported strong volume-driven growth in the second quarter. The results provide a boost for the big biotech after setbacks that slashed its share price last year.
In the second quarter, Celgene reported sales growth of 17% to $3.8 billion. Importantly, volume gains drove 15% of the sales growth, according to an investor presentation. With the results, the company increased its guidance for multiple myeloma med Revlimid by $200 million to $9.7 billion for the year.
All told, Celgene increased its 2018 sales guidance to $15 billion, up from a previous estimate of $14.8 billion.
The results come as the entire pharma industry is facing scrutiny over pricing; many companies have responded by rolling out new pricing principles or pledging to keep pricing flat through the rest of 2018. In May, the Trump administration rolled out a blueprint to control drug prices by focusing on negotiations, regulatory changes and much more.
Days later, HHS secretary Alex Azar said the president would keep a close eye on pricing. Azar said he wouldn't want to be the next company to raise prices "not justified by inflation or change in clinical benefit."
Sure enough, the industry faced a new firestorm in early July after Pfizer raised the prices of dozens of drugs. President Trump tweeted that the company "should be ashamed" of the move. Pfizer opted to defer the price hikes after a phone call between CEO Ian Read, Trump and HHS secretary Alex Azar.
Since then, many drugmakers have pledged to pause price hikes for the remainder of the year, even if some had only just raised them. Merck, Novartis and Roche are among the drugmakers committing to keep pricing flat through the rest of 2018.
Celgene, for its part, pledged to limit price hikes to the rate of medical inflation late last month. The pledge came right on the heels of recent price increases for Revlimid and Pomalyst, and those came on top of routine price hikes in recent years. As SunTrust analyst Yatin Suneja pointed out in a note to clients, Revlimid's price has nearly doubled since 2010, to $19,473 per 28-count bottle after the recent increase.
At the time, Suneja wrote that continued increases could drag Celgene into the price-hike spotlight. Even with the pledge, Celgene allowed itself a loophole. The commitment doesn't apply in "exceptional circumstances" when a med clearly provides more value than the medical inflation price increase limit would allow, according to the company.
In a twist that promises to keep Celgene in the limelight in at least one state, former CEO Bob Hugin has run for a Senate seat in New Jersey. His opponent, incumbent Bob Menendez, and patient activists have attacked the company's history of price hikes.
Celgene's second-quarter results come as the company works to move past setbacks that have hurt investors' faith in the drugmaker. Among them are the company's failed trial on Crohn's disease candidate GED-0301 last October and its move to trim $1 billion to $2 billion off its Otezla 2020 sales guidance due to competition.