(Reuters) – Drugmakers including Merck & Co, Eli Lilly and AstraZeneca Plc reported strong first-quarter earnings and several raised their expectations for 2023, as post-pandemic demand for cancer and other treatments jumped.
The earnings on Thursday shine a spotlight on the pharmaceuticals sector, which has remained largely insulated from the impact of inflation and supply chain disruptions.
Sales at Merck, Lilly, AstraZeneca beat estimates, mainly helped by their growth-driving treatments, such as Eli Lilly’s diabetes drug and obesity-hopeful Mounjaro, while sales of Merck’s cancer drug Keytruda came in ahead of estimates.
Shares of Eli Lilly jumped 3.5% in premarket trading, while those of Merck rose 2.5%.
AstraZeneca was up marginally after sales of cancer treatment Imfinzi and strong demand in emerging markets helped soften the hit from falling sales of COVID drugs.
Most companies also reported a rise in research and development costs as they ramped up spending on newer treatments and expanded approvals for older ones in preparation of some drugs losing patent protection.
Merck, for example, reported a 66% jump in R&D costs, attributing about $1.2 billion to a charge from its acquisition of Imago, while R&D expenses jumped 23% to $1.99 billion at Eli Lilly.
Eli Lilly missed profit estimates mainly due to the higher costs.
“You gotta spend money, to make money!,” said BMO Capital Markets analyst Evan Seigerman.
Drugmakers are also looking to complement internal R&D with deals to fill in the loss of revenue from therapies facing patent losses.
AbbVie reported first-quarter sales that missed estimates for most treatments, including for blockbuster therapy Humira. Humira sales in the U.S. fell 26.1% in the quarter to $2.95 billion as it faced its first competition from a biosimilar rival.
AbbVie shares were down 6.2% after sales of newer treatments Rinvoq and Skyrizi, which it has been hoping will fill the gap of Humira’s sales, missed expectations.
Sales of Merck’s cancer immunotherapy Keytruda, which will start losing patent protections in 2028, remained strong and trounced analysts’ lofty estimates.
At Eli Lilly, the drugmaker raised its annual revenue and profit forecasts after topping first-quarter sales estimates on demand for its closely watched diabetes drug Mounjaro, which is being used off-label as an obesity treatment.
Lilly released trial data that met expectations and said it will complete submission of U.S. regulatory approval for obesity in the coming weeks.
Newer obesity drugs such as Mounjaro and Novo Nordisk’s Wegovy are expected to compete in a multibillion dollar market.
(Reporting by Manas Mishra in Bengaluru; Editing by Caroline Humer and Sriraj Kalluvila)
