With its stable of aesthetic products, Allergan won’t be nearly as affected by health-care overhaul as other drug makers and medical product companies. The maker of Botox actuallyboosted its 2010 earnings forecast today, although it did project a $12 million sales hit this year and as much as $70 million in 2011, largely because of greater Medicaid discounts.
The legislative changes being implemented this year — including those Medicaid rebates, the taxation of retiree drug subsidies and a discount on brand name drugs for Medicare Part D participants marooned in the doughnut hole — have a generally negative impact on pharma and biotech companies. Starting in 2014, provisions that will expand coverage to the previously uninsured will have a more positive effect.
Here’s what else we know so far about the impact of health care legislation:
- Bristol-Myers lowered its 2010 earnings estimate by 12 cents a share, to between $1.84 and $1.94 a share, and lowered sales estimates by between $300 million and $400 million, citing the overhaul as one factor. It said the hit to sales and earnings in 2011 will be “double” what it is this year.
- Celgene raised its 2010 sales and earnings estimates, but said changes under the new law would pare about $35 million to $40 million from this year’s sales and as much as $90 million from sales next year. Over the long haul the new law will have only a “modest” impact.
- Merck said sales will be trimmed by about $170 million this year and between $300 million and $350 million in 2011 due to provisions such as Medicaid drug rebates.
- Baxter reduced its 2010 earnings estimate, mostly due to a slowing market for its plasma-based products, but partly due to health-care legislation. It cut its earnings estimate by 28 cents, 10 cents of which it attributed to Medicaid drug rebates.
- Amgen is projecting 2010 sales will be reduced by between $200 million and $250 million.
- Abbott cut its 2010 earnings outlook to a range of $4.13 to $4.18 a share from its earlier outlook of $4.20 to $4.25 a share. Revenue will be down an estimated $230 million in 2010 and an incremental $200 million in 2011.
- Gilead lowered its 2010 net product sales projection to a range of $7.4 billion to $7.5 billion, down from its previous $7.6 billion to $7.7 billion estimate.
- Johnson & Johnson sees 2010 earnings reduced by a nickel, to a range of $4.80 to $4.90 a share excluding certain costs. Health-care legislation will also pare revenue by between $400 million and $500 million.
- Lilly cut its 2010 earnings estimate to a range of $4.35 to $4.50 a share from a previous estimate of $4.65 to $4.85 a share. The company also said its 2010 sales will be clipped by between $350 million and $400 million, and its 2011 sales by as much as $700 million.
