By Sarah Toy
Health-care earnings announcements are in full swing. Government insurance giant Centene Corp. reported on Tuesday morning, and Anthem Inc., Biogen Inc., Boston Scientific Corp. and Swiss drugmaker Novartis AG reported on Wednesday.
Next up are AbbVie Inc. /zigman2/quotes/202428675/composite ABBV -0.55% and Bristol-Myers Squibb Co. /zigman2/quotes/202559280/composite BMY +1.71% Here’s what investors can expect on Thursday as these two pharmaceutical giants report first-quarter earnings.
AbbVie, which is expected to report earnings on Thursday ahead of the opening bell, is facing a reckoning overseas as competition in Europe eats into profits from top-selling drug Humira. Sales of Humira, a biologic drug that treats autoimmune conditions like rheumatoid arthritis, made up 61% of the company’s revenue in 2018. The drugmaker warned investors that sales would drop this year after competitors like Mylan NV /zigman2/quotes/209413137/composite MYL +0.27% and Amgen Inc. /zigman2/quotes/209157011/composite AMGN +1.77% began selling lower-cost biosimilars of the drug in Europe in October. AbbVie has said the competition will likely reduce overall Humira sales by $2 billion this year.
Shares of the company have fallen 14% so far this year. Investors are worried about AbbVie’s eroding Humira prospects overseas, though U.S. sales of the drug should still be strong, thanks to its approximately 136 U.S. patents , some of which won’t expire until 2034.
Analysts polled by FactSet expect the company to report first-quarter revenue of $7.772 billion lower than $7.934 billion a year ago. Humira sales are expected to fall to $4.404 billion from $4.709 billion in the year-ago quarter. Earnings per share should come in at $2.06, higher than $1.87 a year ago.
Bristol-Myers Squibb, also set to announce earnings on Thursday morning ahead of the market open, is expected to report a profit of $1.09 per share on revenue of $5.752 billion, up from 94 cents per share on revenue of $5.193 billion a year ago, according to analysts polled by FactSet.
The company has been making a lot of news recently, thanks to its planned $74 billion acquisition of Celgene Corp. , which Bristol shareholders approved earlier this month .
Shares of the company have fallen 12.5% so far year. The stock suffered a sharp drop after Bristol’s announcement in January that it would acquire Celgene, a sign of investors’ uneasiness with the deal. In the rocky months that followed, investors including Starboard Value LP and Wellington Management Co. pushed back on the deal, though Starboard later dropped its opposition after Institutional Shareholders Services Inc. and Glass Lewis & Co. said Bristol shareholders should vote in favor of the acquisition.
But investors still have concerns. Celgene and Bristol both face significant challenges — Celgene will lose U.S. patent protection on its multiple myeloma treatment Revlimid in the next few years, and Bristol’s biggest earner Opdivo is up against heavy competition from Merck & Co.’s /zigman2/quotes/209956077/composite MRK -0.23% Keytruda in the cancer space. Most recently, the FDA approved Keytruda as part of a combination therapy for kidney cancer , putting the drug in direct competition with Opdivo in the kidney cancer space.
Health-care stocks have experienced considerable volatility since January. They had a particularly bad week last week, sparked by murmurs of a single-payer health system and proposals to tighten regulations around drug pricing.
Shares on Thursday were down slightly, with the Health Care Select Sector SPDR Fund ETF /zigman2/quotes/205918244/composite XLV -0.21% slipping 0.1%. The health-care ETF has gained just 0.9% so far this year, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.05% has gained 17%.