CSL chief executive Paul Perreault says strong sales growth of the biotechnology giant’s specialty products could see the division grow to be larger than the legacy haemophilia group, which has been hampered by increasing competition.
The specialty division, which sells diagnostic products and drugs to control bleeding during surgical operations, was the standout performer in CSL’s interim financial results.
The company reported a 3 per cent rise in net profit to $US646 million ($715 million) in the first half of 2013-14. Underlying profit of $US685 million, which removes the effect of a $US39 million legal settlement, beat analyst expectations.
Revenue for the six months ended December 31 rose 5 per cent to $US2.7 billion. The specialty products division accounted for 15 per cent of CSL’s revenue and grew sales at 16 per cent on a constant currency basis to $US403 million.
Mr Perreault said although the specialty division had lower sales than CSL’s Immunoglobulin ($US1.1 billion) and haemophilia ($US550 million) divisions in the half, it had grown at double-digit rates “for the last number of years”.
“We expect those [specialty] products to continue to grow,” he said.
Mr Perreault said the division’s “exceptional” performance was underpinned by the drug Kcentra, which was approved for use in the United States in 2013. Kcentra can reverse the effect of blood thinning agents such as warfarin within two hours, Mr Perreault said.
This action stops the risk of a patient on warfarin ‘bleeding out’ in surgery. “Typically for elective surgeries, the physician will titrate down the [blood thinning agent], but in emergency surgery there’s no time to titrate the dose,” Mr Perrault said. “That’s when patients can get into trouble.”
Mr Perreault said the approval of Kcentra was the United State’s “first change in transfusion medicine in 50 years.”
In a further boost to the demand, the US Food and Drug Administration granted Kcentra ‘orphan drug’ status in August, which prevents competitors from entering the space for seven years. The drug has been marketed in Europe for a number of years under the Beriplex.
UBS analyst Andrew Goodsall said the specialty division was “the one to watch” in the second half of 2014, because Kcentra presented an opportunity for significant revenue growth.
Haemophilia product sales fell 4 per cent on a constant currency basis in the half. Mr Perreault said there were “numerous competitors scrambling” to develop new treatments for the rare disease. This had lead to an increase in clinical trials, which meant many patients were discarding their current regime in favour for free medicines offered as part of trials.
“Haemophilia is a rare disease,” he said. “There aren’t that many patients.”
In addition, a large proportion of CSL’s haemophilia products are sold to healthcare providers on a tender basis, which meant growth tended to be uneven, Mr Perreault said.
However, Mr Perrault said he expected sales growth CSL’s recombinant drugs to treat the disease, so the jostling for size between the specialty and haemophilia divisions would be a “good race.” “It could be a neck and neck race over the next few years,” he said.
In the current half, CSL will embark on a phase two trial of its heart attack prevention drug CSL112, which Mr Perreault said presented “significant potential to transform our business.”
CSL hopes to show that its drug which removes cholesterol from plaques on artery walls will prevent the risk of heart attacks in patients who have already suffered an initial cardiac event. About 80,000 Australians have a heart attack each year and, of those, about 12 per cent suffer a subsequent attack, stroke or die.
Mr Perreault said CSL expects results from its clinical trial towards the end of 2015 or early 2016.
The company announced an interim unfranked dividend of US53¢, which was US3¢ higher than the previous corresponding period. The dividend will be paid on April 4.
CSL shares have gained 21 per cent over the past year. At 12:22pm AEDT, the stock was trading down 3.3 per cent to $67.59.
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