Lowered Forecasts, New Drug Designations, and Device Recalls: Healthcare Recap

Here’s a look at the current state of the healthcare industry.

Merck (NYSE:MRK): Current Price $41.15

Merck reported fourth-quarter earnings at the beginning of February that showed how deeply the expiration of key patents had cut into the company’s profitability. Merck saw sales slide 5 percent in the three-month period to $11.74 billion, as revenue from its asthma drug Singulair, which lost patent protection last year, fell 67 percent. And if it’s not one problem, it’s another. Shares of the company closed slightly down on Wednesday after Merck cut its first-quarter guidance.

However, the lowered forecast was not prompted by fears of further patent losses. Profit will be reduced by 5 cents per share in the current three-month period due to a devaluation of Venezuela’s currency, the company said in a statement. Excluding one-time charges, profit is expected to come in between 76 cents and 78 cents per share. Having already faced disappointing fourth-quarter results, investors did not seem too shaken by the announcement, even though Wall Street’s consensus estimate is for earnings per share of 86 cents.
Pharmacyclics (NASDAQ:PCYC): Current Price $77.03 and Johnson & Johnson (NYSE:JNJ): Current Price $75.66

The average American may not recognize Wednesday, February 12, 2013, as a “historic moment in oncology,” but it is — at least for Pharmacyclics chief executive officer Bob Duggan. The Sunnyvale, California, company, along with its partner Johnson & Johnson, secured a “breakthrough” drug status from the U.S. Food & Drug Association for the experimental blood cancer therapy ibrutinib.

“We are truly honored to have received this breakthrough designation and are pleased for patients and clinicians with the FDA’s decision to expedite the development of ibrutinib,” Duggan said.

The breakthrough designation was created in a piece of legislation passed by Congress last year that reauthorized FDA’s user fee programs for drug and device reviews, according to Bloomberg. Such a decision by the agency will benefit both patients and drug companies alike, including Pharmacyclics. The company’s stock jumped to a new 52-week high of $77.05 after the announcement.

This designation will enable drugs for serious diseases to hit the market more quickly, and companies will have closer communications with top FDA officials, Janet Woodcock, director of the agency’s Center for Drug Evaluation and Research, said Tuesday.

Pharmacyclics and Johnson & Johnson expect to submit ibrutinib for approval before the end of the year.
St. Jude Medical (NYSE:STJ): Current Price $42.84

What is more dangerous than a hole in the heart? Its treatment, apparently.

After receiving a warning letter from the FDA last month regarding the state of its manufacturing process at a California-based factory, the medical devices company issued a Class 1 recall for its Amplatzer TorqVue system, which is used to treat dangerous heart defects, reported Bloomberg.

Regulators found that the core wire of the delivery system had a tendency to fracture, warranting what is considered the most serious type of recall. A Class 1 is implemented when the use of a product will cause “serious adverse health consequences or death.”

“If the device has already been used successfully, there is no cause for concern or additional action,” the company said in a statement. “St. Jude Medical is taking a conservative approach in removing all remaining inventory.”

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