Daiichi's new clot-fighter Savaysa can't make up for $2.6B Benicar patent loss: analysts

Daiichi Sankyo's got a big revenue hurdle coming up, with top treatment Benicar set to lose patent protection next year. A black-box warning on its new drug Savaysa isn't helping matters. So analysts are wondering what the company can do to plug the forthcoming sales holes.

Right now, Benicar brings in about 27% of Daiichi's annual revenue--sales that'll be in jeopardy come next year. After that, prospects aren't looking very good, analysts tell the news service.    

"The market can't expect earnings growth for Daiichi Sankyo for the next three to 5 years," said Takashi Aoki, a fund manager at Mizuho Asset Management. "One of the common attractions for pharma stocks is stable cash flows that bring steady returns to shareholders. But its M&A track record is bad and hasn't generated cash, which means shareholders can't expect that."

The company had pinned its hopes on Savaysa, a newcomer anticoagulant that won the FDA's favor in January. But Savaysa launched into a competitive market--Johnson & Johnson, Boehringer Ingelheim and a Bristol-Myers Squibb-Pfizer tandem already have their own next-gen treatments jockeying for position, not to mention the old guard treatment warfarin. And the Daiichi drug will have a black-box warning weighing it down.

While Daiichi EVP Manabu Sakai last month characterized the safety flag--which discourages patients with normal renal function from using Savaysa--as a "small restriction," analysts see it as a competitive disadvantage. Cantor Fitzgerald analyst Emilia Falcetti told Bloomberg she sees the drug netting $220 million in fiscal 2019, a far cry from the blockbuster numbers J&J's Xarelto and Boehringer's Pradaxa are putting up already. And more to Daiichi's point, a far cry from Benicar's $2.6 billion haul last fiscal year.

The Japanese pharma has also said it's scouting opportunities to pick up U.S. resources, but there may not be many to go around.

"The company is in a little bit of a tricky position at the moment," Falcetti told Bloomberg. "I can't see an obvious solution to their problem. They have a little bit of money they could use for an acquisition, not a huge amount. But there's nothing much that's cheap, good value in the U.S."

And of course, Daiichi's most recent M&A splash only compounded the drugmaker's problems. Its 2008 buyout of India's Ranbaxy Laboratories turned disastrous when that drugmaker's numerous manufacturing foul-ups began eating into Daiichi's profits. The Japanese drugmaker finally jumped ship and agreed to sell its Ranbaxy stake to Sun Pharma last year.

The result? Daiichi is pinching pennies and sacking employees--and a stock fall may be next, Daiwa Securities Co. analyst Kazuaki Hashiguchi told the news service.

"It looks largely impossible to turn around the business in a few years with its current pipeline," he said. "I'm watching closely how quickly and strongly it can get out of it and recover its earnings."

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Special Reports: Top 15 Drug Launch Superstars - Xarelto - Bayer and Johnson & Johnson | Top 10 Cardio Drugs 2012 - Benicar

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