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Biogen Idec Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 25, 2012 04:34PM
Biogen Idec Inc (BIIB) filed Quarterly Report for the period ended 2012-09-30. Biogen Idec Inc. has a market cap of $34.42 billion; its shares were traded at around $144.43 with a P/E ratio of 23.2 and P/S ratio of 6.8. Biogen Idec Inc. had an annual average earning growth of 19.8% over the past 5 years.
Highlight of Business Operations:Total cost and expenses increased 7.4% in the third quarter of 2012, compared to the same period in 2011. This increase was primarily the result of a 12.8% increase in cost of sales, a 0.9% increase in research and development expense, and a 14.6% increase in selling, general and administrative costs over the same period in 2011. These increases reflect an increase in manufacturing costs driven by higher sales, spending associated with the development of our early stage product candidates and preparing for the potential launch of BG-12 in 2013.
For the three and nine months ended September 30, 2012, compared to the same periods in 2011, the increase in U.S. TYSABRI revenues was due to increased unit sales volume and price increases. U.S. TYSABRI unit sales volume increased approximately 10% for the three and nine months ended September 30, 2012, over the prior year comparative periods. Net sales of TYSABRI from our collaboration partner, Elan, to third-party customers in the U.S. for the three and nine months ended September 30, 2012 totaled $230.4 million and $642.9 million, respectively, compared to $197.2 million and $550.1 million, respectively, in the prior year comparative periods.
For the three and nine months ended September 30, 2012, compared to the same periods in 2011, the decrease in rest of world TYSABRI revenues reflects the deferral of a portion of our revenues recognized on sales of TYSABRI in Italy (as described below), the negative impact of foreign currency exchange rates, net of hedging gains and pricing reductions from austerity measures enacted in some countries, offset by an increase in demand. Increased demand resulted in an increase of approximately 8% and 14%, respectively, in rest of world TYSABRI unit sales volume for the three and nine months ended September 30, 2012. The change in rest of world TYSABRI revenues for the three and nine months ended September 30, 2012, compared to the same periods in 2011, also reflects gains recognized in relation to the settlement of certain cash flow hedge instruments under our foreign currency hedging program. Gains recognized in relation to the settlement of certain cash flow hedge instruments under our foreign currency hedging program totaled $3.4 million and $8.5 million, respectively, for the three and nine months ended September 30, 2012, compared to losses recognized of $2.1 million and $6.7 million, respectively, for the three and nine months ended September 30, 2011.
Governments in a number of international markets in which we operate, including Germany, France, Italy, the United Kingdom, Portugal and Spain have announced or implemented measures aimed at reducing healthcare costs to constrain the overall level of government expenditures. The implementation of measures varies by country and include, among other things, mandatory rebates and discounts, price reductions and suspensions on pricing increases on pharmaceuticals. Certain implemented measures negatively impacted our revenues in 2011 and have continued to do so during the three and nine months ended September 30, 2012. We expect to see continued efforts to achieve additional reductions in public expenditures and consequently expect that our revenues and results of operations will be further negatively impacted if these, similar or more extensive measures are, or continue to be, implemented in these and other countries in which we operate. Based upon our most recent estimates, we continue to expect that such measures will reduce our revenues in 2012 by approximately $40.0 to $60.0 million of which nearly $25.0 to $30.0 million has been realized as of September 30, 2012.
Within the European Union, our accounts receivable in Italy and Portugal continue to be subject to significant payment delays due to government funding and reimbursement practices. Deteriorating credit and economic conditions have generally led to an increase in the average length of time that it takes to collect our accounts receivable in these countries. During the third quarter of 2012, as part of a new program to resolve outstanding amounts long overdue, the Portuguese government paid us approximately $21.2 million, contributing to a decrease in our accounts receivable in Portugal. Similarly, in June 2012, the Spanish government paid us approximately $112.0 million, contributing to a significant decrease in our accounts receivables in Spain. Our net accounts receivable balances from product sales in Greece, Italy, Portugal and Spain totaled $211.1 million and $239.0 million as of September 30, 2012 and December 31, 2011, respectively, of which $21.0 million and $126.5 million were classified as non-current and included within investments and other assets within our condensed consolidated balance sheets as of those dates. Approximately $3.9 million and $56.0 million of the aggregated balances for these four countries were overdue more than one year as of September 30, 2012 and December 31, 2011, respectively.
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