Forest Laboratories, Inc. Revises Fiscal Year 2013 Earnings Guidance Primarily Due to Evolving Conditions in the Lexapro / es...
June 11 2012 - 8:00AM
Business Wire
Forest Laboratories, Inc. (NYSE:FRX), an international
pharmaceutical manufacturer, today announced revised FY 2013
earnings guidance.
Following the expiration of Lexapro’s patent exclusivity in
March 2012, rapidly evolving and unanticipated conditions in the
Lexapro / escitalopram market necessitate revisions to the
Company’s previous forecasts for both branded Lexapro sales and
royalty income earned on sales of the escitalopram authorized
generic, distributed by an independent third party. The combined
impact is a reduction in projected fiscal 2013 earnings of
approximately $0.25 per share for the full fiscal year.
Royalty income earned on sales of the Company’s authorized
generic version of Lexapro is now expected to be $60 million, down
from the previous forecast of $115 million. The reduction is driven
by a significant variance in two principal assumptions: the brand
price discount rate and the authorized generic distributor’s
(“AGD”) share of the market, particularly during the six-month
period of Hatch-Waxman exclusivity. Based upon the Company’s
analysis of market dynamics for similar genericization of branded
products involving six-month exclusivity periods, the Company’s
fiscal 2013 plan assumed that generic competitors would settle at a
discount to the brand price of approximately 30% and that the AGD
would achieve approximately a 44% market share through September
12, 2012. However, based upon market information the AGD has priced
escitalopram at a 60% - 65% discount to the brand price and that
the AGD’s market share is approximately 40%.
In addition, sales of branded Lexapro are now expected to be
approximately $215 million for the fiscal year compared to the
previous estimate of $250 million. Based on current market data and
given the greater than expected discounting, the Company estimates
that the generic substitution rate is 88% versus the 84% originally
anticipated, with lower than forecasted pharmacy demand and a
higher proportion of units sold through government healthcare
programs at lower prices.
Separately, Forest distributes Levothroid, a synthetic
levothyroxine product for the treatment of hypothyroidism, pursuant
to a distribution agreement with the product’s manufacturer and
holder of the product’s NDA. The manufacturer has notified Forest
that the FDA has indicated it has regulatory and quality concerns
with respect to the facility where the product is manufactured. The
manufacturer has stopped manufacturing and shipping product from
its facility. At this time, Forest understands that the
manufacturer is continuing to work with the FDA to address the
FDA’s concerns.
Pending further details Forest has discontinued shipping
Levothroid to its customers and does not know how long the product
will be unavailable. Forest’s annual sales of Levothroid are
approximately $17 million. If the manufacturing disruption goes on
for an extended period of time, or if the product is subject to a
recall, the loss of Levothroid sales and associated costs could
reduce earnings by approximately $0.03 per share for the full
fiscal year.
The Company’s actively promoted products are collectively on
plan. The Company now expects reported fully diluted earnings per
share for fiscal year 2013 to be in the range of $0.65 to $0.80 per
share and non-GAAP fully diluted earnings per share (which excludes
acquisition related amortization) of $0.95 to $1.10.
About Forest
Laboratories
Forest Laboratories’ (NYSE: FRX) longstanding global
partnerships and track record developing and marketing
pharmaceutical products in the United States have yielded its
well-established central nervous system and cardiovascular
franchises and innovations in anti-infective, respiratory,
gastrointestinal, and pain management medicine. The Company’s
pipeline, the most robust in its history, includes product
candidates in all stages of development across a wide range of
therapeutic areas. The Company is headquartered in New York, NY. To
learn more, visit www.FRX.com.
Except for the historical information contained herein, this
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements involve a number of risks and uncertainties, including
the difficulty of predicting FDA approvals, the acceptance and
demand for new pharmaceutical products, the impact of competitive
products and pricing, the timely development and launch of new
products, and the risk factors listed from time to time in Forest
Laboratories’ Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, and any subsequent SEC filings. Forest assumes no
obligation to update forward-looking statements contained in this
rerelease to reflect new information or future events or
developments.
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