Boehringer Ingelheim Braces for Key Patent Expiry as 2007 Sales Up 8.8% Y/Y

German pharmaceutical company Boehringer Ingelheim has published its financial results for 2007, revealing an 8.8% year-on-year (y/y) increase in sales to nearly 11 billion euro (US$17.2 billion) in comparable terms. Its Prescription Medicines business, which accounts for the bulk of the group's annual revenues, saw a 10% y/y comparable rise in sales, which reached 8.7 billion euro, while the Consumer Health Care franchise brought in 1.1 billion euro in turnover and recorded a growth rate of 11.7% y/y in the process. Boehringer's status as a privately-owned company means that it is not obliged to release standardised financial reports, and as such, there are no precise figures available on the company's cost of sales. However, spending on R&D as well as marketing and administration are included under "other operating expenses", which expanded by 11.7% y/y. This had a tangible effect on Boehringer's operating income for 2007, which suffered a 1.9% y/y decline to 2.1 billion euro.

Boehringer's main brands all performed solidly during 2007, with top-selling chronic obstructive pulmonary disease (COPD) treatment Spiriva (tiotropium bromide) seeing sales boosted by 35% y/y in comparable terms and reaching 1.8 billion euro. However, this is a considerable decline from the 45.2% y/y hike in Spiriva sales witnessed just one year before. Double-digit gains in turnover were seen for nearly all of Boehringer's leading products from the Prescription Medicines business last year, with Parkinson's disease drug Sifeol/Mirapex (pramipexole) managing to record an impressive 26% y/y rise to 644 million euro in comparable terms, despite the mid-year arrival on the U.S. market of rival drug Neupro (rotigotine transdermal patch), produced by Belgian UCB's subsidiary Schwarz Pharma (Germany).

While growth in sales of Consumer Health Care products was somewhat more restrained, the most significant loss for Boehringer was arthritis treatment Mobic (meloxicam), which lost some 340 million euro in sales. Given that Mobic's 2006 turnover was published as 579 million euro, this marks a crippling loss of 142.3% y/y.

Outlook and Implications

Boehringer Ingelheim has not provided any clear financial guidance for 2008, but CEO Dr Alessandro Banchi has said that the company is "very optimistic as our financial basis is sound and our prospects are encouraging." However, two major challenges to growth lie ahead: one is the continued downturn in Mobic sales, although Boehringer has largely succeeded in masking the losses incurred so far with growing sales of other drugs. The other challenge is the impending expiry of U.S. patent protection for benign prostatic hyperplasia drug Flomax; 2009 is expected to be the drug's last full year of patent exclusivity. According to Pharma Times, the loss of Flomax's U.S. patent combined with the end of patent protection for Sifrol/Mirapex in other markets could lead to earnings contracting by as much as 1 billion euro over 2009-2012.