Drug Rally Wears Off As Medicare Bill Sinks In
With Congress finally set to approve new Medicare drug benefits, the fever that has gripped drug-company stocks is starting to lift.
Beginning Nov. 10, when it became clear that Congress was likely to pass some version of the legislation, shares of drug companies benefited, in part because the bill keeps the private sector in charge of drug prices and blocks the legal importation of cheap foreign drugs.
But the stocks have eased back in recent days, and some investors already are starting to fret that the long-term side effects of the drug bill could overshadow its recent tonic effect. The new benefit, these investors say, only postpones, rather than eliminates, the political pressure on the drug industry -- and delays a nasty round of price-cutting that could still come.
Matt Stephani, portfolio manager for Idex's Great Companies America mutual fund, owns drug stocks such as Wyeth, Abbott Laboratories, Pfizer, and Johnson & Johnson, and says he is worried. While the drug benefit will provide a short-term boost to the industry in terms of a bump in profits, "It will lead to more uncertainty in the long term because of the purchasing power of the federal government," Mr. Stephani says. "When you have half of the prescriptions being paid for by the government, you run the risk of your industry becoming very subject to the whims of Congress."
Drug-industry executives agree, calling the Medicare drug deal a necessary evil to deal with immediate political pressure stemming from high drug prices for seniors. Under the bill, the federal government would set aside $400 billion over 10 years to add a prescription-drug benefit to Medicare, which would be administered by insurers and private health plans.
Prices, analysts say, may get pinched, as health insurers running the new plans use their increased clout to drive hard bargains. But the private-sector approach drug makers advocated would at least mitigate the risk of prices dictated directly by government officials.
Some drug-industry optimists believe the expansion of coverage for drugs, even at lower prices, will spur offsetting increases in overall sales. "I think we as an industry will pay a price for it, but nevertheless I believe this will be compensated to a large extent by volume gains," says Daniel Vasella, chief executive of Swiss drug giant Novartis last week. Novartis shares are up 12% since Nov. 10.
Robert Essner, chief executive of Wyeth, supported the legislation, but sees no jackpot as a result. "I doubt very much this will be a financial boon for the pharmaceutical industry or our company," he says. Instead, he predicts increased competition among drug makers and greater pressure on prices.
Critics of the legislation aren't buying the industry's view. "This is a Medicare with no brain and no heart -- just a checkbook," says Alan Sager, a Boston University health-policy professor and critic of the privatization plan. He predicts the drug benefit will be a windfall for pharmaceutical companies, swelling their profits as more people get drug coverage but at a high price to the government.
The drug plan takes full effect in 2006. At that point, the government and senior citizens could find that drug insurance doesn't fit their expectations or their budgets. Seniors may rebel after gazing at their "doughnut hole" of financial responsibility, and the government may find that so many retirees get shoved onto Medicare rolls that costs skyrocket.
That, of course, is in the uncertain future. In the short run, the drug companies got what they wanted in terms of control over prices and blocks on foreign imports. Some sectors in particular, including some biotechnology companies, pharmacy-benefits managers and hospitals, stand to get beefed-up payment under the new law.
Among the big pharmaceutical companies, "those with more exposure to chronic illness will be helped more" than others because they are favored by seniors, says Heather Brilliant, an analyst at Morningstar Inc. Ms. Brilliant advises investors to shift into shares of Pfizer, which makes Lipitor, the world's biggest-selling drug. Lipitor treats high cholesterol and is taken on a continuing basis, so the drug benefit for seniors could be a boost to sales.
Drug companies that dominate the diabetes and arthritis-care areas also likely will benefit as sales of these drugs rise. Here again, Pfizer is the largest player in the arthritis area with Celebrex and Bextra, while Merck also is big in arthritis drugs. Eli Lilly is a big player in diabetes treatment, led by its Humalog drug. Lilly's antipsychotic drug Zyprexa, which accounts for about 36% of its sales, also could get a boost from the health-care bill, some analysts say, because the drug has been too expensive for some seniors.
On the flip side, companies with less of an emphasis on chronic drugs, including Abbott Laboratories, could see less of a boost, while specialized companies such as Genzyme that target diseases that aren't age-related also won't be helped much. Genzyme's biggest drug is Cerezyme, which treats a rare inherited disease.
Medimmune also won't see much of a boost, analysts say, because its biggest drug, Synagis, is for infants born prematurely.
"Every drug maker will have some [positive] exposure, but the question is of magnitude, and the magnitude is more intense for Pfizer," Ms. Brilliant says.
The bullish case for all drug makers is that the companies could make up for price pressures with more volume. That's what happened in the early 1990s, when health-management organizations, rather than choking the life out of drug companies by driving prices down, ended up boosting demand for their products.
But a key question for the future of the benefit, and the drug industry, remains: What happens to the 12 million retirees who now have drug coverage through their former employer? Even with $82 billion in subsidies to encourage employers to continue paying for their retirees' drugs, the temptation for employers to drop the benefit will be strong. Companies fork over $1,900 a year in drug coverage for each retiree, and the government subsidy works out to only $420 a year, according to Richard T. Evans, pharmaceutical analyst at Sanford C. Bernstein & Co.
Employers, already strapped with rising health-care costs for employees, are likely to slash their expenses by pushing the bills off on Medicare. Such shifting likely would degrade the gains in sales of drugs because the government plan is less generous than most employer-based private plans.
The specter of price controls won't likely come to a head until after the program has been up and running awhile, say 2008 or 2010, say analysts. That is when the pressure for the government to whack prices might become irresistible. The government's ability to negotiate prices would be strong because by then its purchases would account for 40% to 50% of retail-drug sales, up from 16% today.
制药类股涨势难继
随著美国国会行将批准新的老年保健医疗制度(Medicare)关于药品福利方面的规定，人们对制药公司股票的热情正在消退。
从11月10日起，形势开始变得明朗：国会将会批准某个版本的老年保健医疗制度改革方案，制药公司股票因此获益，部分原因是该议案使制药公司仍然握有药品定价的主动权，并且该议案会为廉价国外药品的合法进口设置障碍。
不过这几天这些公司的股价有所回落，一些投资者开始担心，改革方案长期的负面效果会令其短期的振奋作用相形见绌。这些投资者说，新的药品福利计划只会推延而不是消除制药行业面临的政治压力，并且只会推迟难以避免的降价竞争。
Idex的共同基金Great Companies America持有惠氏(Wyeth, WYE)、雅培制药(Abbott Laboratories, ABT)、辉瑞(Pfizer Inc., PFE)、辉瑞公司(Pfizer Inc., PFE)和强生(Johnson & Johnson, JNJ)等公司股票。该基金的投资组合经理马特?斯蒂法尼(Matt Stephani)说，他感到忧心忡忡。虽然该改革方案会为制药行业的利润带来短期的提振，但长期来看有更大的不确定性，原因是联邦政府的买单能力并非视若当然。他说，当有一半的处方药收入来自联邦政府时，制药行业的命运就将受制于国会的态度。
制药行业高层人士们也同意这种看法，他们认为老年保健医疗制度改革是应付近期政治压力的苦口良药。根据该方案，联邦政府在未来10年将拿出4,000亿美元资金，以增加老年保健医疗制度中对处方药的补贴。这将由保险公司和私人健康计划提供商进行管理。
分析师认为，由于健康保险公司会利用其提高的影响力在新的保险计划用药上砍价，药品价格可能会因此受到挤压。但制药公司倡导的由私人行业来进行管理的办法至少会缓解价格直接由政府官员操控的风险。
制药界一些乐观人士认为，即便药品价格低一些，但扩大政府补贴的处方药范围将有助于提振销售量。瑞士制药巨头诺华制药公司(Novartis AG (ADS), NVS)首席执行长丹尼尔(Daniel Vasella)上周称，他认为制药行业将为此蒙受代价，不过在很大程度上会因销售量增加得到弥补。该公司股价自11月10以来已经上涨了12%。
惠氏首席执行长罗伯特?埃斯勒(Robert Essner)支持老年保健医疗制度的改革提案，但他认为这对制药行业或惠氏本身来说并不会在财务上带来多大收获。相反，他预计制药公司的竞争会加剧，价格压力会加大。
对提案持批评态度的人士则不接受制药行业的看法。波士顿大学(Boston University)医疗保健政策教授艾伦?塞奇尔(Alan Sager)说，改革提案没头没脑，简直就是向制药公司发放支票簿。他预计，由于更多的人会获得处方药补贴，该方案会推动制药公司的利润增长，但这是以政府付出高昂的价格为代价。
改革计划会在2006全面生效。到时候，政府和老年人士会发现医药保障和他们的预期及开支计划都格格不入。老年人士在看到无尽头的经济负担时或许都想揭竿而起，而政府会发现老年保健医疗制度令其在成本负担方面不堪重负。
当然，这还不是板上钉钉。短期来看，制药公司将如愿得到价格控制权和对外国进口的限制。按照新的规定，包括部分生物科技公司、处方药管理公司和医院在内的一些行业得到的收入必将增加。
Morningstar Inc.的分析师布里恩特(Heather Brilliant)认为，大制药公司中，拥有的治疗慢性疾病的药物越多，公司获益将会越大。她建议投资者转而购买辉瑞公司的股票，因为该公司是Lipitor的生产商。Lipitor是世界上销售额最高的药物，用于治疗高胆固醇，且需要持续服用。因此纳入老年保健医疗制度会有助于销售增加。
在治疗糖尿病和关节炎的药物市场占主导地位的公司也有可能获益，原因是这些药品的销售也将增加。辉瑞将是关节炎药物的最大赢家，其拥有Celebrex和Bextra。默克(Merck)在这个市场上也不赖。礼来(Eli Lilly)的Humalog药物使其在糖尿病药物上占有重要地位。一些分析师说，礼来的安定药Zyprexa也将受益。该药物占其总销售额的36%，一些老年人士过去一直苦于其价格昂贵。
另一方面，业务重点并不在治疗慢性疾病药物的公司受益会少一些，这包括雅培制药。而诸如Genzyme等开用于发治疗与老年人无关的药物的专业制药公司也不会获益太多。Genzyme的王牌药物是Cerezyme，用于治疗一种罕见遗传疾病。
分析师说，Medimmune也不会得到太多帮助，因其主打药物Synagis是用于早产儿的。
布里恩特说，每一家制药商多少都会受到一定积极影响，问题只是程度大小而已。对于辉瑞(Pfizer)的促进作用会更大一些。
对所有制药商都有利的因素是，它们可以用销量弥补价格压力。这和20世纪90年代的情况是一致的，当时医疗保健组织(health-management organization)，在压低药物价格的同时也提高了对药物的需求量。
Sanford C. Bernstein & Co.的制药业分析师理查德?埃文斯(Richard T. Evans)说，但与这项福利和制药业的前途有关的关键问题依然是：如何处理从前雇主处获得药物福利的1,200万退休者？虽然有820亿美元的补贴用于鼓励雇主继续支付他们的退休员工的药物福利，但促使雇主取消福利的诱惑是非常强烈的。公司平均每年为每个退休职工支付的药物福利费超过1,900美元，政府的补贴平均仅为每人每年420美元。
雇主们早已为日益增长的员工医疗成本而感到头疼，它们可能会将责任转移到美国老年保健医疗制度(Medicare)以削减医疗费用。这种转变将削弱药物销售量的增长，因为一般来说，政府的药物福利计划不如私营部门雇主提供的计划慷慨。
分析师说，萦绕在制药公司心头的价格控制忧虑只有在这一计划启动并运转一段时间后才会出现，估计是在2008或 2010年。预计到那时要求政府控制药物价格的压力可能将变得不可遏制，政府的议价能力也将是今非昔比。届时的政府采购额将达到药物零售销售额的40%-50%，而现在仅占16%。
