WHEN Wyeth had four medicines delayed by United States regulators in the past year, its bad news had just started.
Now the drug maker faces losing 40 percent of its profit to generic competitors, Bloomberg News reported.
The approval setbacks were exacerbated last month by the unanticipated release of generic versions of Wyeth's Protonix acid-relief medicine. Competition from cheaper copies may shave as much as 40 US cents a share from 2008 earnings, said Barbara Ryan, a Deutsche Bank AG analyst in Greenwich, Connecticut.
Wyeth's regulatory mishaps have led analysts to slash peak annual revenue estimates for the drugs to less than half the US$6 billion forecast by the Madison, New Jersey-based company in 2006.
None of 24 analysts surveyed by Bloomberg News rate the company a sell even though Wyeth also may face generic competition this year to its most-popular drug, the antidepressant Effexor, driving earnings down further. Protonix and Effexor generated a combined US$5.5 billion in 2006.
"There is nothing in the pipeline now that comes close to replacing the 40 percent of profits that come from Protonix and Effexor," said Ryan in a telephone interview. She has a hold rating on the stock.
When Wyeth presented its research pipeline to investors in October 2006, Roopesh Patel, an analyst with UBS Investment Research in New York, rated the stock a buy.
"At that point in time, given the sheer number of drugs, Wyeth had one of the more impressive late-stage pipeline portfolios," Patel said. "I don't think anybody could have anticipated that just about every one of those drugs would have such difficulty." He now has a neutral rating for Wyeth.
Wyeth shares rose 15 US cents to US$46.14 in New York Stock Exchange composite trading on Wednesday. The stock has dropped 8.6 percent in the past 12 months, compared with a 4.8 percent gain in the Standard & Poor's 500 Health Care Index.
Wyeth Chief Executive Officer Bernard Poussot said the company will revise its 2008 earnings forecast and announce cost-cutting measures this month.
"The impact of lost Protonix sales has the potential to be significant," Poussot said during a December 24 conference call with investors.
Since January 1, 2007, the US Food and Drug Administration has postponed clearance of Wyeth's bifeprunox for schizophrenia, Pristiq for depression and menopausal hot flashes, Viviant for bone loss, and the constipation drug methylnaltrexone. The kidney-cancer drug Torisel and the contraceptive Lybrel were delayed before winning approval.
"Those products people thought could become real contributors have been taken completely out or have some real issues now and the products are nowhere near where we thought they would be," said David Heupel, a fund manager at Thrivent Financial for Lutherans in Minneapolis. His fund, which owns US$60 billion in assets, including health stocks, doesn't own Wyeth.
Linda Bannister, an analyst with Edward Jones in St Louis, cut her peak revenue estimate for Pristiq to US$500 million, from close to the US$2 billion originally forecast by Wyeth. Ryan projects US$250 million.
Anthony Butler, with Lehman Brothers in New York, said Pristiq may generate US$1.5 billion as a depression treatment. He no longer projects revenue from the drug's use for menopause.
"In 2005, Wyeth was a stock that was moving into the high US$50s and we had a buy," Butler said in a telephone interview. "This may be a kitchen sink year where they have to get through all of these things before it can get better." He now rates Wyeth "neutral."
For Viviant and Aprela, another pill combining it with the hormone estrogen, Bannister projects about US$1 billion in peak annual revenue now, roughly half her original forecast. Ryan forecasts about US$500 million. Wyeth projected US$2 billion.
The bright spot in Wyeth's pipeline is a drug for Alzheimer's disease, analysts say. The medicine, called bapineuzumab, is a genetically engineered antibody designed to remove protein deposits in the brain that inhibit thinking.