Anyone can judge drugmakers' annual results by the numbers: top line, bottom line, growth, earnings or some combination of financial markers. It's more daring to step up with a letter grade that factors in all of a company's highs and lows. Still, one long-time pharma watcher has decided to do it, using the old school letter grades of A, B and C.
Forbes' Matthew Herper gives the grade cards to the 16 companies with market caps over $50 billion. He notes that he gave no D's or F's, the lowest two grades possible. There were no pharma disasters in 2013, he says. So who got the A's? Bristol-Myers Squibb ($BMY), Celgene ($CELG), Biogen Idec ($BIIB), Gilead Sciences ($GILD) and AbbVie ($ABBV).
For Bristol-Myers Squibb, he cites a turnaround masterminded by CEO Lamberto Andreotti. He points to work in cancer immunotherapy and the fact that it is in the mix with a hepatitis C candidate. Remember that the company has one of the most closely watched experimental immunotherapy drugs in the pipeline, nivolumab.
Celgene is noted for its strong performance in cancer drugs, which has turned into a strong financial performance for investors. Herper doesn't mention it, but the company three times last year raised its financial guidance as its workhorse drug Revlimid saw strong sales growth, along with newer products Abraxane and Pomalyst.
He gives Biogen Idec an A based on the "stunning" results of its multiple sclerosis drug Tecfidera. Can't argue with that. Sales for Tecfidera in the third quarter hit $286 million, far higher than the $205 million or so that analysts forecast, and pushed Biogen's net profit up 22% to $488 million.
Gilead Sciences makes the top ranking because it got approval for perhaps the most highly anticipated drug of the year, Sovaldi. The hepatitis C drug in combo with other drugs is expected to provide a cure for many people. The only reason it didn't get an A+ for the accomplishment, Herper explains, is its decision to halt a combo of Sovaldi with a BMS drug that might have benefitted even more people.
The final A is for AbbVie, a company that didn't even exist until this time last year. Abbott Laboratories ($ABT) spun it off because it was believed to be dragging down its medical device business. But it has prospered itself, mostly on the sales of its powerhouse drug, Humira. The rheumatoid arthritis drug is the best-selling drug in the world right now. But it also gets credit for being in the hepatitis C drug race and having a solid pipeline of cancer drug candidates.
The lowest grade of the listing went to Eli Lilly ($LLY) for a whole lot of reasons, but even then it was a solid C, not even a C-. The drugmaker is facing strong headwinds as generic competition started last month for Cymbalta, the antidepressant that's now Lilly's top-selling drug and a $5 billion-a-year powerhouse. Of course, that can't be helped, but the company is struggling to push its in-development drugs to market--and even if they win FDA approval, those products may not deliver what Lilly needs. Meanwhile, it has slashed its workforce and frozen salaries to offset some of the damage that will accrue to its bottom line as Cymbalta sales fall away. For the rest of Herper's rankings, check out his column.
- read the Forbes column