The Chesterbrook, Pa.-based distributor of drugs and health supplies based runs 26 U.S. pharmaceutical distribution centers, four U.S. specialty distribution centers, and two Canadian distribution hubs. The company reported earnings April 30th and beat estimates by $0.26 per share, delivering profits of $1.45 versus the Capital IQ consensus of $1.19. AmerisourceBergen also raised guidance for full-year earnings to a range of $4.85-to-$4.95 from prior guidance of $4.53-to-$4.63. And unlike a lot of companies this quarter, AmerisourceBergen beat on top-line revenues as well, delivering revenue growth of 15%.
AmerisourceBergen's results were buoyed by strong demand for generic pharmaceuticals and robust sales for hepatitis C drugs. Several new, effective forms of Hep-C treatments are available from Gilead Sciences (GILD), AbbVie (ABBV), and Johnson & Johnson (JNJ), driving rapid growth in this segment.
The company also continues to benefit from its alliance with drugstore-chain operator Walgreens Boots Alliance (WAG). And non-pharma sales also soared 72%, thanks to the recent acquisition of MWI Veterinary Supply, a distributor of animal health products. AmerisourceBergen also has good leverage to future growth in U.S. biosimilars.
Wall Street firm UBS (UBS) recently upgraded the stock to "buy" concluding that among drug distributors, AmerisourceBergen has the greatest earnings leverage to the $65 billion in biologics that will be facing biosimilar competition over the next five years.
Unlike simple chemical formulations like Tylenol, complex biologics cannot easily be converted into generic drugs upon patent expiration. Biosimilars are basically "generic" versions of biologic substances that attempt to mimic the activity and safety of the original biologic substance. While the use of biosimilars has been approved in Europe and Japan for years, the FDA just approved the first biosimilar in the U.S. this past March.