Author Archive
Large Cap Pharma’s Dependence on US List Price Growth is Unsustainable
List price increases account for 48% of real US pharma sales growth since 1980, and roughly ½ of global returns to R&D spending since 1990. More recently eroding mix has compounded reliance on real pricing, which drove 145% of real
The Pro-Cyclical US Healthcare Thesis – Impact of ROW Economic Risks
US healthcare demand growth is slow for cyclical reasons; this implies an acceleration of US healthcare demand as the broader economy improves; we recommend hospitals (e.g. HCA, UHS, THC), HMOs (e.g. UNH, WLP), and non-Rx consumables (e.g. BAX, BDX, COV)
Hospitals’ Stable to Improving Net Pricing Power
Hospitals trade at a 30+% discount (’13 PE forward) to cap-weighted Healthcare and the SP500; fundamental concerns appear centered on a combination of weak volume / procedure mix, and the effect of Budget Control Act (BCA) related Medicare rate cuts
And Now Some Humble π … Brand Drug Pricing Runs the Traditional Election-Year Red Light
We had generally expected brand drug pricing to decelerate into 2012, but the January price trend is fairly convincing evidence that we simply got this wrong – real pricing gains for brand drugs are continuing apace As we’ve shown previously,
US Healthcare Demand Slow for Cyclical (i.e. Temporary) Reasons; Volume-Sensitive Names are Undervalued
From 1960 to 2007 average per-capita ‘units’ and ‘mix’ of care (which we follow using an aggregate measure termed ‘elasticity/mix’) grew 2.2% (real, per-capita) annually, then fell 40bp each year from 2008 through 2011, reaching a 50-year low in 2010
US Drug Pricing in 2012 – The Slowing Crowd
We expect US brand drug pricing to decelerate in 2012. Whether we’re right or wrong should soon be known; much of the industry’s annual pricing actions fall in January, and we believe the January actions of the early companies influence
Dismal EU Growth Forecasts Mean Pricing Pressure on (Innovative) Healthcare Exporters
On Thursday, the European Union cut its 2012 real GDP growth forecast to just 0.5% – down nearly 70 percent from its 1.9% projection just six months ago. Ominously, the EU added that “the probability of a more protracted period
Individual Mandate Now 2-1-1 in Circuit Court; Supreme Court Will Weigh-In…
On November 14 the Supreme Court agreed to review the constitutionality of the Affordable Care Act’s individual mandate, granting petitions for writs of certiorari on four aspects of the 11th Circuit Court’s decision in Florida et al v. Dept. of
PBM Pricing Post-AWP – An Estimate of Sustainable Earnings Power
Using Medco (MHS) as a proxy for large PBMs, we show that generic buying margins dominate PBM gross profits; PBMs appear to have sacrificed most (or even all) alternative sources of gross margin, levering the industry’s pricing structure almost completely
ACA at the Supreme Court – What You Should Know
This note summarizes the events leading up to the Supreme Court’s likely review of the Affordable Care Act (ACA), and attempts to handicap the timing and outcome of the review We anticipate a verdict in or around June of 2012.