Trends in the Drug Related Products Industry

NEW YORK, NY -- (Marketwire) -- 02/27/13 -- The Drug Related Products industry has seen years of growth. The industry has benefited from an ageing population in the developed world and increasing demand for emerging markets. However, the industry now faces challenge from increasing generic competition. In addition, companies are also assessing what sort of impact President Obama's Affordable Care Act (ACA) will have on their businesses. Going forward, it will be interesting to see how Drug Related Products companies such as Herbalife Ltd. (NYSE: HLF) and Auxilium Pharmaceuticals Inc. (NASDAQ: AUXL) will adopt the changing market dynamics.

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2012 saw the expiration of patents on several blockbuster drugs. The trend is expected to continue in 2013. For drug companies this means increasing generic competition and pricing pressure. The key for major biopharmaceutical companies will be to develop a robust pipeline of products in order to offset the impact on top-line from increasing generic competition. One can also expect consolidation in the industry as major drug companies, who have the cash resources, buy smaller biotech companies that are developing potential blockbuster drugs.

The most significant development in the Healthcare industry in recent years has been the passage of Affordable Care Act (ACA). Last year, the Supreme Court upheld the ACA, which means drug companies will now have to prepare for major changes. However, ACA offers significant opportunities for drug companies in the long-term as the increase in the number of insured individuals would boost their top-line.

Last week, Herbalife Ltd. reported record fourth quarter financial results. The company's net sales for the fourth quarter of 2012 were $1.1 billion, representing an increase of 20% over the same period in the previous year. Volume for the quarter rose 18%.

Herbalife reported fourth quarter net income of $117.8 million, or $1.05 per share, compared to $105.4 million, or $0.86 per share, reported for the same period in the previous year.

Michael O. Johnson, Chairman and CEO of Herbalife Ltd., said that the company continues to deliver record results in sales and profitability as its independent distributors go deeper into existing markets, developing more and more customers using its nutrition products every day. Johnson further said that obesity and poor nutrition are global public health problems and the company's distributors are proud to be part of the solution.

Auxilium Pharmaceuticals Inc., on Tuesday, also reported its financial results for the fourth quarter ended December 31, 2012. For the quarter, the company reported net revenue of $172.5 million, compared to $73.3 million reported for the same period in the previous year. The company's revenue for the full year was $395.3 million, up from $264.3 million reported in 2011.

Adrian Adams, President and CEO of Auxilium Pharmaceuticals Inc., said that in 2012, the company accomplished a key goal of achieving full year profitability and the company also saw good overall commercial growth with both Testim and XIAFLEX. Adams said that in 2013, the company will continue to focus on financial discipline and commercial execution.

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