QUOTE AND NEWS
FiercePharma  Dec 17  Comment 
Last week, a New York judge called a halt on Actavis' plan to pull Namenda off the market, throwing off its strategy for switching patients to a newer extended-release version.
Forbes  Dec 17  Comment 
Discontinuation of Namenda in order to boost sales of the XR version reinforces all of the bad views that people have of the pharmaceutical industry and provides great fodder for its critics. Actavis has joined the “Big Pharma” club. It would...
New York Times  Dec 12  Comment 
New York’s attorney general had accusing Actavis of forcing patients to switch to a newer version of the drug to thwart competition from generic manufacturers.
Benzinga  Dec 3  Comment 
SCYNEXIS, Inc. (Nasdaq: SCYX) today announced the appointment of Guy Macdonald and Marco Taglietti, M.D., to its Board of Directors. Mr. Macdonald currently serves as President and Chief Executive Officer of Tetraphase Pharmaceuticals, Inc., and...
FiercePharma  Nov 5  Comment 
Actavis has been inking deals with Forest Laboratories and Warner Chilcott to get its hands on the companies' suite of branded products. Now, the company is celebrating the fruits of its labor with promising Q3 numbers and a slew of new deals on...
FiercePharma  Nov 4  Comment 
Actavis nabbed a big portfolio of branded products when it bought Forest Laboratories earlier this year. But it also inherited a quality-control problem.
GenEng News  Oct 6  Comment 
Actavis plans to acquire Durata Therapeutics for $675 million-plus, the companies said today, in a deal that broadens the buyer’s portfolio with the already-marketed infectious disease drug Dalvance™ (dalbavancin)—and continues Actavis’...
FiercePharma  Sep 25  Comment 
Actavis has been switching patients from the original version of the Alzheimer's treatment Namenda IR, which is going off patent, to its new once-a-day version. But the New York Attorney General was not impressed with its plan to just quit making...
TheStreet.com  Sep 17  Comment 
NEW YORK (TheStreet) -- Shares of Actavis are dropping after New York's attorney general announced that he had sued the company to prevent it from forcing Alzheimer's patients to switch to a medicine that will be under patent for a longer...
FiercePharma  Sep 16  Comment 
Some analysts called it a cheap trick when Forest Laboratories said it would stop making the Alzheimer's drug Namenda this fall so it could push patients to switch to their new long-acting version as generic rivals to the original loom. New York...




 

Forest Laboratories, Inc. (NYSE: FRX) makes branded and generic prescription drugs. Two drugs account for the majority of Forest's total sales: Lexapro, a drug for the treatment of depression, and Namenda, a drug for the treatment of Alzheimer's disease. The patents for both drugs will expire by 2013., meaning FRX has only a few years to replace the revenue generated by these two products.

New products in Forest Laboratories' pipeline include ceftaroline, an injectable antibiotic acquired through the acquisition of Cerexa, Inc. in 2007; linaclotide, a product for the treatment of gastrointestinal disorders developed through a 50/50 co-development and marketing parntnership with Ironwood Pharmaceuticals, Inc.; and aclidinium, a drug for treating respiratory diseases to which Forest has acquired exclusive United States marketing rights through a collaborative agreement with Laboratorios Almirall SA of Spain.

Three companies make up the majority of FRX's purchasers, making FRX dependent on these major buyers. McKesson (MCK), Cardinal Health (CAH), and AmerisourceBergen Corporation (Holding Co) (ABC) made up 36%, 33%, and 20% of FRX's total sales in 2010 respectively.[1] As a result, the loss of any one customer could have huge implications for FRX's revenues.

Company Overview

Forest Laboratories revenues come primarily from the sales of branded products Lexapro and Namenda, as well as various other branded and generic drugs and several over-the-counter products.

Business and Financial Metrics

FRX has grown its revenues for the past five years. In 2010 (FRX's fiscal year ends March 31 of each year), FRX posted total revenues of $4.19 billion, an increase from its 2009 total revenues of $3.92 billion. However, despite the increase in revenues, FRX's net income actually declined. Between 2009 and 2010, FRX's net income decreased from $768 million in 2009 to $682 million in 2010.[2]

Key Trends and Forces

Forest Laboratories Gets 89% of its Sales From Only Four Drugs

In fiscal 2010, FRX earned 89% of its revenues from four drugs: Lexapro®, Celexa®, Namenda® and Savella®.[3] The patents for both Lexapro and Namenda are set to expire in March 2012, and September, 2013 respectively. If Forest is to remain successful going forward, they will need to develop or license one or more new blockbuster products to make up for the inevitable sales losses to be suffered from the introduction of generics.

The Antidepressant Market is Populated with Numerous Products and Has Begun Slowing

Sales of Lexapro have grown steadily, accounting for 17.7% of total antidepressant prescriptions in the SSRI/SNRI (selective serotonin reuptake inhibitor/serotonin-norepinephrine reuptake inhibitor) category.[4] However, the antidepressant market has slowed, while Lexapro has lost some market share to generics of (ironically enough) Forest Laboratory's own Celexa and other SSRI's.[5]

The Maturation of the Alzheimer's Drug Market Will Slow The Rate of Namenda's Sales Growth

Sales of Forest's Alzheimer's treatment drug Namenda have grown significantly, giving the drug 33.8% of total prescriptions in the Alzheimer's market. This is due largely to its introduction and status as the first FDA approved drug for treatment of moderate-to-late stage Alzheimer's Disease. While Forest Laboratories predicts that sales will continue to grow for the next several years, analysts predict the maturation of the Alzheimer's drug market should continue to slow the rate of growth.

Competition

Forest's relatively small size within the pharmaceutical industry makes it particularly susceptible to competition, lacking the financial resources to develop and sell a wide array of products, relying instead on the success of a few key drugs. Some of Forest Laboratories' major competitors include:

  • Teva Pharmaceutical Industries (TEVA): The world's largest producer of generic drugs[6], Teva sells numerous generic versions of the branded drugs that Forest Laboratories produces and sells, most notably Cetalopram, the generic form of Forest's Celexa, a selective serotonin reuptake inhibitor and precursor to Lexapro.[7][8]
  • Pfizer (PFE): One of the worlds largest drug companies with a market cap more than ten times Forest Laboratories',[9] Pfizer develops, produces, and distributes hundreds of pharmaceutical products. These include (most notably from Forest's point of view) three different types of antidepressants (including SSRI Zoloft)[10] and Aricept, a drug for the treatment of Alzheimer's disease[11]
  • Eli Lilly and Company (LLY): Another major pharmaceutical company that develops, produces and distributes drugs including Prozac and Cymbalta for depression.[12] Their status as a producer of central nervous system drugs makes them a direct competitor of Forest's.
Company Total Revenues (most recent filing) R&D Expenditures (most recent filing) Net Income (most recent filing)
Forest Laboratories (FRX)$3.84 B$671 MM$968 MM
Pfizer (PFE)$48.42 B$8.10 B$8.14 B
Eli Lilly and Co (LLY)$18.63 B$3.49 B$2.95 B
Teva Pharmaceuticals (TFE)$2.82 B$198 MM$539 MM



References

  1. FRX 10-K 2010 Item 1 Pg. 16
  2. FRX 10-K 2010 Item 8 Pg. 46
  3. FRX 10-K 2010 Item 8 Pg. 55
  4. "Forest Laboratories Form 10-K For Fiscal Year 2008; Part IV, Condition and Results of Operations"
  5. The Value Line's Custom Report of Forest Laboratories, 7/2008
  6. "BioJerusalem entry on Teva Pharmaceutical Industries."
  7. "Notes to Consolidated Financial Statements from Forest Laboratories Form 10-K, Section IV"
  8. "Wikipedia entry on Celexa (citalopram)"
  9. "Google Finance's Coverage of Pfizer"
  10. "Pfizer's List of Products for the Treatment of Depression, August 2008"
  11. "Pfizer's List of Products for the Treatment of Alzheimer's Disease, August 2008"
  12. "Eli Lilly's Official Product List, August 2008"
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki