AmerisourceBergen CEO: Expanding Insurance Good For Company
April 23 2009 - 1:22PM
Dow Jones News
Proposals to overhaul federal health-care policies, especially
measures to expand coverage to those with no medical insurance,
should be a positive thing for AmerisourceBergen Corp. (ABC), the
drug distributor's chief executive said Thursday.
"We think the 46 million or so uninsured will be addressed,
which will increase pharmaceutical utilization, a strong positive
for (the company) and our industry," R. David Yost said during a
conference call after the pharmaceutical services firm posted a 7%
increase in fiscal second-quarter profit.
"But we're watching the issue of (drug) importation closely," he
added. "We think the security of the pharmaceutical supply chain
will dominate and sideline this topic." President Barack Obama's
budget blueprint supports the idea of allowing Americans to buy
prescription drugs from other countries.
"In total, we are not seeing anything in the health-care
reform...currently that we think will be a big negative for
(AmerisourceBergen) and could in fact be a strong positive," Yost
said.
A boost in demand for drugs certainly would be welcome to a U.S.
pharmaceutical market where sales are projected to shrink this year
for the first time in the more than 50 years that a key research
firm has been tracking growth.
IMS Health Inc. (RX) on Wednesday predicted U.S. pharmaceutical
sales will decline 1% to 2% this year, compared with a previous
projection of an increase.
Yost said AmerisourceBergen and the wholesaler industry are
proving resilient in the weak economy, with the company's
generic-drug offerings gaining traction as it captures more of its
customers' generic business.
"Obviously this is as turbulent an economic environment as any
of us has seen with what may be the slowest industry growth in my
three and a half decades in this business," he said.
"The fundamentals of the industry continue to be strong," he
said. "The older people get, the more drugs they take," and the
growth engines for AmerisourceBergen - distribution of generic and
specialty drugs - remain the premier spaces in the industry, Yost
added.
AmerisourceBergen's higher quarterly profit came on strength in
the company's sales of profitable generic and specialty drugs. The
distributor exceeded Wall Street's average per-share earnings
estimate and raised its full-year EPS outlook based on expectations
of fewer shares outstanding and lower interest expense.
Stronger margins due to generics, fee-for-service arrangements
with manufacturers and higher specialty distribution revenue, and
cost controls accounted for much of the upside, according to
analysts at JPMorgan.
AmerisourceBergen shares recently traded up 44 cents, or 1.3%,
to $35.20.
-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285;
dinah.brin@dowjones.com