Walgreens riding out economic storm, propelling surge in chain’s stock price
It could have been so much worse.
That conclusion, apparently, is what investors drew from Walgreens’ sales and earnings report for the second quarter ended Feb. 28. And it was enough to push the company’s stock price up sharply and burnish the investment outlook for other drug retailers: even Rite Aid’s stock price responded with a nice up-tick.
By historical standards, a 6.7% drop in net income and flattened-out same-store sales growth would be considered a dismal performance by Walgreens, which has notched 34 years of consecutive sales and earnings records in one of the most remarkable and extended achievements in U.S. corporate history. But in the midst of one of the bleakest periods in the nation’s economic history, with consumers in wholesale retreat, retailers staggering under the weight of excess inventory levels and discretionary spending in a profound slump, Walgreens’ ability to ride out the storm was a dose of comfort to soothe an anxious Wall Street.
What’s more, the 6,400-store drug chain appears to be building a more solid foundation for the next phase of U.S. pharmacy retailing as other, weaker retailers fall prey to the recession. The company just bought New Jersey-based Drug Fair as that company spiraled into Chapter 11, and, tellingly, managed to boost its prescription unit dispensing volume by 4% in a period during which script counts declined among many of its rivals.
It’s all but certain that more rough days lie ahead, both for Walgreens and other pharmacy retailers, and for Wall Street. But the company’s ability to withstand the economic tsunami that has staggered the retail industry – and the apparent progress it’s making in its ambitious overhaul and cost-cutting program – point to better days ahead.
Two new diabetes drugs to be reviewed by FDA next week
NEW YORK The Food and Drug Administration’s Endocrinologic and Metabolic Drugs Advisory Committee will review two new diabetes drugs next week, and this has left investors nervous, according to published reports.
On April 1, the committee will review Onglyza (saxagliptin), by AstraZeneca and Bristol-Myers Squibb, and review Victoza (liraglutide) the next day. According to Reuters, however, an FDA rejection earlier this month of Takeda Pharmaceutical’s alogliptin calling for additional clinical data, caused the company’s stock to fall.
According to the news agency, an analyst said that the FDA might be slow to approve drugs similar to those on the market. Onglyza is a DPP-4 inhibitor, belonging to the same class as alogliptin; Merck & Co.’s DPP-4 inhibitor Januvia (sitagliptin) is already on the market.
Mylan confirms first-to-file challenges
PITTSBURGH Mylan could get exclusive rights to four generic drugs.
The generic drug maker confirmed Thursday that six drug companies and two research centers had sued it in connection with four “first-to-file” regulatory approval applications containing Paragraph IV certifications.
- Sepracor sued Mylan and Alphapharm in the U.S. District Court of New Jersey over an application for eszopiclone tablets in the 1 mg, 2 mg and 3 mg strengths. The tablets are a generic version of the insomnia drug Lunesta, which had sales of $796 million in 2008, according to IMS Health.
- Shire sued Mylan and subsidiary Matrix Labs in the U.S. District Court for the Southern District of New York over an application for lanthanum carbonate chewable tablets in the 500 mg, 750 mg and 1 g strengths. The tablets, used to treat kidney disease, are a generic version of Fosrenol, which had sales of $108 million in 2008, according to IMS Health.
- OSI Pharmaceuticals, Pfizer and Genentech sued Mylan in the U.S. District Court in Delaware over an application for erlotinib hydrochloride tablets in the 25 mg, 100 mg and 150 mg strengths. The tablets, used to treat lung cancer, are a generic version of Tarceva, which had sales of $492 million in 2008, according to IMS Health.
- Galderma Labs, New York University and the Research Foundation of the State University of New York sued Mylan in the U.S. District Court of Delaware over an application for doxycycline delayed-release capsules in the 40 mg strength. The capsules are a generic version of Galderma’s adult rosacea treatment Oracea, which had sales of $82 million in 2008, according to IMS Health.
Under the Hatch-Waxman Act of 1984, the first company to seek approval for a generic version of a drug gets six months of market exclusivity once the generic drug gets final approval from the Food and Drug Administration. A Paragraph IV certification asserts that a branded company’s patent on a drug is invalid, unenforceable or won’t be infringed by a generic version.