(Reuters) – Cencora beat Wall Street estimates for second-quarter profit on Wednesday, driven by robust demand for costly specialty medicines that treat complex diseases such as cancer and rheumatoid arthritis.
The drug distributor has been benefiting from specialty drugs and biosimilars – close copies of complex biotech drugs – at a time when intense competition pulls down prices of generic medicines.
Generic drugs are exact copies that can be easily produced and sold once the original medicine loses patent protection, typically leading to quick drops in the prices of the original by 90% or more.
However, Cencora said last month that it has been seeing a “moderation” in the price deflation of generic medicines.
Biosimilars, which include cheaper versions of AbbVie’s Humira and Regeneron Pharmaceuticals’ Eylea, offer a compelling opportunity for drug distributors, analysts have said.
“Biosimilars of Humira will likely set the tone in their ability to dethrone the brand product to build a lasting pharmacy-dispensed biosimilar market,” TD Cowen analyst Charles Rhyee wrote in a note ahead of Cencora’s earnings report.
Rhyee estimates the biosimilar market to represent a $125 billion revenue opportunity for U.S. drug distributors by 2033.
Sales at Cencora’s U.S. healthcare business, its largest unit by revenue, came in at $61.3 billion in the second quarter ended March 31, up more than 8% from a year earlier.
Total sales rose nearly 8% to $68.41 billion. Analysts were expecting total sales of $70.65 billion, according to LSEG data.
The company also raised the lower end of its 2024 adjusted earnings forecast to between $13.30 and $13.50 per share, from $13.25 to $13.50 estimated previously.
Analysts were expecting an annual profit of $13.45 per share.
On an adjusted basis, Cencora reported quarterly profit of $3.80 per share, beating estimates of $3.69 per share.
(Reporting by Mariam Sunny in Bengaluru; Editing by Devika Syamnath)
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