Yahoo Finance How Did Vertex Perform in 1Q16?
Why Vertex's 1Q16 Earnings Were a Disappointment
Vertex’s 1Q16 performance
Vertex Pharmaceuticals (VRTX) announced its earnings for 1Q16 on April 27, 2016. During the quarter, it earned $398.1 million. Total cystic fibrosis (or CF) drugs sales stood at $394 million.
The company’s CF portfolio grew by 202%, whereas its total sales rose by 187.4% in the quarter based on a YoY (year-over-year) comparison.
Positive earnings for Vertex with expanding revenue base
In the past two quarters, Vertex’s annual revenue growth has exceeded 180%. With such a rising revenue base, Vertex has experienced operating efficiencies, leading to wider margins. For a closer look at the company’s business model, you can read Vertex Pharmaceuticals’ 3-Pronged Business Model.
The commercialized CF portfolio of the company includes two products: Orkambi and Kalydeco. As CF is a rare disease, Vertex enjoys premium pricing for its drugs. Similarly, it’s continuously striving to expand the labels for its key drugs so that it can enjoy a further rise in volume. To achieve sustainable growth, it also plans to diversify its portfolio beyond CF.
For more information on Vertex’s business strategy, you can refer to What’s Vertex’s Strategy to Sustain the Cystic Fibrosis Market?
With rising pricing pressures from the government, the biotechnology industry is facing a downturn. Vertex has fallen by 33%, whereas Regeneron (REGN) has fallen by 15% in the past year. Alexion Pharmaceuticals (ALXN) and BioMarin (BMRN) have fallen by 15% and 25%, respectively, during the same period.
To avoid the volatility and direct risk associated with Vertex while still enjoying exposure to the stock, investors can look for options such as the iShares Russell 1000 Growth ETF (IWF). The ETF holds 0.19% weight in Vertex.
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