Actelion Says Swiss Franc, Generics to Erode Earnings

Actelion Ltd. said the strength of the franc may strip 8 percentage points from profit growth this year as the Swiss developer of drugs for a rare lung disease also faces generic competition for its bestselling medicine.

Excluding currency swings, 2015 core earnings will grow by a low single-digit percentage, the Allschwil, Switzerland-based company said in a statement today. Last year, earnings jumped 20 percent to 743 million francs ($800 million), missing the average analyst estimate of 776 million francs. The drugmaker also said it plans to buy back 10 million shares over three years, valued at about 1.05 billion francs as of Feb. 13.

Actelion faces the expiration this year of the patent on Tracleer, which accounted for about 75 percent of 2014 product sales. The franc’s appreciation against the dollar and the euro is denting the value of revenue in the U.S. and Europe, which account for more than 80 percent of the total. The company’s forecast assumes exchange rates as of Feb. 12 remain constant.

“We must be mindful that -- as most Swiss exporters -- a strong Swiss franc will have a negative impact on Actelion’s Swiss franc earnings,” Chairman Jean-Pierre Garnier said in the statement.

Actelion fell as much as 4.9 percent in Zurich and was down 4.3 percent to 100.9 francs as of 9:02 a.m., giving the company a market value of 11.5 billion francs. The stock has returned 21 percent in the past 12 months to Feb. 13, including reinvested dividends, compared with a 28 percent gain in the Bloomberg Europe Pharmaceuticals Index.

Similar Pricing

Revenue from Opsumit, the follow-up to Tracleer, amounted to 180 million francs last year, missing the average analyst estimate of 190.4 million francs. Actelion is adding about 1,300 new patients per quarter after pricing the drug at the same level as the older treatment, Chief Executive Officer Jean-Paul Clozel said by phone today.

Actelion also expects approval for another therapy, Uptravi, by the end of this year, which analysts predict will add sales of more than 1 billion francs by 2020.

The company has “evaluated many deals” in the past year, but has baulked at prices that some rivals were willing to pay, Clozel said. The chances of the company making a big acquisition this year are low, he said.

Not Ready

“Some large companies need products so much that they are willing to pay a very high premium that we are not ready to pay,” he said. “We would love to do a deal. We don’t need it, that’s for sure.”

Tracleer, Opsumit and Uptravi are designed to treat pulmonary arterial hypertension, a deadly and incurable disease in which the arteries that carry blood from the heart to the lungs narrow, making the heart work harder and causing elevated blood pressure in the arteries of the lungs. That causes symptoms such as chest pain, dizziness and shortness of breath. The disease affects from one in 100,000 people to one in 1 million people, according to the American Lung Association.

The franc has strengthened about 9.6 percent against the U.S. dollar and 13 percent against the euro since the Swiss National Bank scrapped its cap on the currency last month.

(Corrects to show Uptravi is not yet approved, in 10th paragraph of story published Feb. 16.)
Before it's here, it's on the Bloomberg Terminal.
LEARN MORE