The impact of the Euro’s woes on biopharma can be seen most in the currency’s home continent. Last month, the industry’s trade group estimated that unpaid debt owed by governments to the industry climbed more than 50% just from November to February. It rose from €10 billion to between €12 billion and €15 billion, in other words from about $13 billion to as high as about $20 billion.
The European Federation of Pharmaceutical Industries and Associations (EFPIA) said that most of the debt has been accumulated by Greece, Italy, Portugal, and Spain. “Things are getting rapidly worse,” Richard Bergstrom, EFPIA’s director general, told Reuters in February. What EFPIA didn’t detail is the effect of the Euro’s problems on European pharma and biotech companies.
The currency slide has hit both consumer demand for drugs as well as government purchasing of medicines for mostly state-run healthcare systems, according to GlaxoSmithKline. The firm blamed European pricing pressure for a 5% (£320 million or about $500 million) decline in regional sales during 2011. “We anticipate a similar impact in 2012,” GSK noted.
Several other big biopharmas saw sales slumps they attributed to the Euro or trends stemming from the Euro’s slide. AstraZeneca, for example, said total revenue fell 2% at constant exchange rates (CER) despite a 1% gain to $33.6 billion. Western European revenue fell 11% last year, to $8.5 billion, due to both volume and price declines in the mid-single digits plus the loss of about $1 billion in revenue due to competition with generics. Accounting for constant currency, AstraZeneca expects a revenue decline this year “in the low double-digit range.”
For Roche the Euro’s slide against the Swiss Franc led to a 10% loss in group sales, which fell to CHF 42.5 billion ($46.3 billion). The same 2011 result reflected a 1% gain at CER and even a 5% gain in U.S. dollars. Western Europe pharmaceutical sales shrunk 3% at CER to CHF 8.2 billion ($8.95 billion). The effect could have been worse, Roche said, but for the fact that 80% of its cost base is located outside Switzerland.
Sanofi reported that while 2011 net sales jumped by 9.2% to €33.4 billion ($44 billion) at CER, fueled by the $20.1 billion acquisition of Genzyme, the increase shrunk to 3.2% given depreciation against the Euro by the U.S. dollar, the Venezuelan Bolivar, and the Turkish Lira. Worse, the currency woes helped boost the company’s net loss last year to €8.8 billion ($11.5 billion). Western Europe sales slid 4% to €9.13 billion (almost $12 billion), but the drop would have been 10.5% absent Genzyme and sales of A/H1N1 vaccines.
Faring better was Qiagen, as growth from products added through its Cellestis and Ipsogen acquisitions resulted in a strong fourth quarter, with sales rising to $334.4 million, up 17% both in actual and CER terms. Six of those percentage points reflected sales of products from the two companies it acquired.
For all of last year, sales of molecular diagnostics products rose 7% at CER and represented 47% of net sales. Qiagen reports its results in U.S. dollars, which explains why for all of 2011, its 8% sales gain, to nearly $1.2 billion, amounted to only 4% at constant exchange rate.