Question-and-Answer Session
Operator
(Operator Instructions). Our first question today is from Frederick Wise - Leerink Swann, LLC.
Frederick Wise - Leerink Swann, LLC
Excellent quarter. Just trying to understand a little better, gross margin, if you could start with that, tell me if I understand your 58% guidance now for the full year, wasn’t that 58.5% before, you’ve never given fourth quarter gross margin before, does this imply a little more caution? Maybe you could help us understand some of the moving pieces there
Thomas C. Freyman
There’s only one significant moving piece in that, really how much currency has changed since we talked on the second quarter call. As you recall the way we’re positioned internationally, as the dollar weakens while it helps the topline and certainly there’s some profit impact because of the mix effect from the countries it puts a little pressure on the ratio and on top of that when it moves very rapidly there are lags between the immediate impact of topline and as it moves through the earnings statement through the gross margin; so, between the two that’s probably costing us about half a point this year on the gross margin just because of the exchange; that’s really what’s changed since the last time we talked.
Frederick Wise - Leerink Swann, LLC
On Humira, the third quarter US growth was 21%; the fourth quarter you’ve got a tough competition; can Humira grow double digits in the fourth quarter given that competition and given the environment, and maybe you could talk a little bit about how you’re thinking about or what kind of competitive impact that you’re seeing and expect from J&J Symphony and Stelara which was just launched in psoriasis?
Miles D. White
I think if you look at our full-year guidance of 18% to 20% reported and 28% to 30% on an operational basis globally, we did raise that and that would imply double digit growth in the fourth quarter; we can break it out specifically but clearly it reflects strong growth internationally in excess of 20% and continued strong double digit growth; in the US it imply roughly low double digit type growth; so, we’re still very confident in Humira, the projections for the full year, the projections for the fourth quarter. I would remind you though as we discussed earlier in the year we have not factored in any aggressive buying patterns from wholesalers in the fourth quarter, so we’re being a little conservative on that front; so, could there be upside to some of that that’s possible but we think we factored that in appropriately. On competition, really it’s been going as expected for the new competitive entrance and our story on Humira continues to be one of very strong efficacy and safety as you know. The 5-year radiographic progression that we have on the label as I mentioned in my comments will be presenting 8-year radiographic progression data at ACR. Of course we’ve got physical function and major clinical response data and over 12 years of total clinical data. So, we feel very comfortable with the competitive position of Humira, the products that are coming new to the market as we’ve discussed in the past, our fifth, sixth, seventh products to market that really don’t offer any significant clinical advantages versus Humira standard of care. So, we feel very good about it. They’re progressing along in a modest rate if you look at the total scripts for these new entrants. So, we factored that into the modeling, we factored that into our guidance, and really there hasn’t been anything that’s changed since the launch that would change our outlook in any way.
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