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Statins Take Center Stage in Treating High Cholesterol

By Eileen Rojas - Dec 3, 2013 at 5:32PM

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New guidelines on the treatment of high cholesterol recommend the use of statin drugs, which could result in higher sales of statins at AstraZeneca (NYSE: AZN, Mylan Labs (Nasdaq: MYL), and Teva Pharmaceuticals (NYSE: TEVA).

The makers of statins may want to ramp up production as new guidelines by the American College of Cardiology and the American Heart Association promote the effectiveness of these drugs in managing high cholesterol. The guidelines urge doctors to treat high cholesterol based on several risk factors that affect a patient's risk of developing cardiovascular disease, or CVD. This is a shift from the traditional focus of lowering a patient's LDL and non-HDL cholesterol to a target number. The ultimate goal is to reduce the number of people at risk for (or death from) CVD. According to the data reviewed, statins provide the greatest risk-benefit ratio of all lipid-lowering therapies available.

Most of us are aware of the dangers of having high cholesterol, which increases the risk of developing heart disease, the leading cause of death in the U.S. American adults with high LDL cholesterol, also known as "bad" cholesterol, totals 71 million, or 33.5% of the population. To make matters worse less than 50% of adults with high LDL cholesterol get treatment. In addition to lifestyle changes, statins can help lower blood cholesterol by blocking the action of a chemical in the liver that is necessary for making cholesterol.

The guidelines mention four types of patients that can benefit most from statin therapy; click here for the AHA website and more information on these specific patient types. The panel promoting the use of statins, after reviewing other cholesterol-lowering therapies, arrived at the conclusion that these drugs provide the most benefit along with the lowest number of safety issues. If prescriptions for statin drugs begin to rise, the following companies could see their revenues positively affected.

Guidelines could increase the use of generic statin therapies
Many statins are currently available in generic formulations. Companies like Mylan Labs ( MYL ) and Teva Pharmaceutical ( TEVA 2.36% ) manufacture generic versions of the statins Lescol and Zocor. Mylan's North American generic business has been hurting this year, accounting for the majority of the company's 70% drop in new product revenues. However, the generics segment did grow outside North America, and Mylan also saw double-digit growth in their specialty drugs. While generic drugs do have lower profit margins in comparison to their branded counterparts, a rise in statin prescriptions could provide an incremental boost to the company's current sales of $27.9 million of generic Lescol.

Mylan's third-quarter adjusted gross profit was $2.53 billion, and adjusted gross margins were 50%, virtually unchanged from the prior period. Adjusted gross margins grew due to an increase in new product sales and were offset by unfavorable pricing of generic products in all regions. If sales of its statin drugs increase, this could offset the negative impact of falling prices in the generic segment.

Teva finds success with new generic drugs
In Teva's latest third quarter, the company had six successful generic product launches in the U.S. alone. Teva's net revenues for the quarter were $5.1 billion, up 2% from 2012. Non-GAAP EPS was $1.27 and GAAP diluted EPS was $0.84. The increase was attributed to higher U.S. sales of generic medicines and higher revenues in their global specialty and OTC segments.

The U.S. market accounted for 54% of total revenues. The company predicts that its generic business will be able to sustain its profitable growth over the long term. Teva's latest sales figures of generic Zocor are $1.64 billion, a number that could also increase with the new guidelines. Full-year 2013 net revenues are expected to range between $19.7 billion and $20.3 billion.

Brand name Crestor a top seller for AstraZeneca
A popular statin whose patent is active until 2016 is Crestor, manufactured by AstraZeneca ( AZN 2.18% ). Crestor's 2012 worldwide sales grew 3% to $8.3 million and was the most prescribed brand name statin, according to a report from IMS Health. However, once a drug's patent expires, revenues take a substantial hit.

AstraZeneca's third-quarter decline of nearly $350 million in revenues was in part due to loss of exclusivity. Regional revenue performance in the third quarter also suffered, as both U.S. and European revenue dropped 8% and 4%. However, the Japanese market showed strong performance, with Crestor and Symbicort showing a combined, year-to-date increase of 63.8% in volume market share. The company expects a single digit decline in fiscal 2013 revenue.

My Foolish conclusion
Over the last five years, U.S. prescriptions for statins have grown 20% to 265 million a year. The market for statins alone is worth $10 billion in the U.S. and $29 billion worldwide. If these new guidelines are followed and statin prescriptions increase, investors could see higher sales of the statin therapies sold by these pharmaceutical companies.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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