How to save money on health care with a Philips HealthCare brand prescription
Posted September 16, 2018 10:08:59The pharmaceutical giant’s pharmacy business is one of the most lucrative in the pharmaceutical sector, generating $1.8 billion in profits last year, with the company’s annual revenue reaching $9 billion.
But its specialty pharmacy business was a bigger money maker, generating an estimated $1 billion in profit.
The pharmacy business also generated $1 trillion in sales last year.
“Our pharmacy business generates a huge amount of revenue, and our specialty pharmacy is a lot more lucrative,” said John Dallaire, chief financial officer at Philips Canada.
“The more we can focus on our specialty business, the better off we are.”
Philips also sells prescription drugs through its pharmacy network.
Philip said it expects its drug business to grow from $2.5 billion in 2016 to $4.4 billion this year.
That means its drug revenue will grow at about the same rate as its pharmacy business.
Last year, Philips said it would invest $2 billion in its specialty business and $400 million in its pharmacy unit.
A growing number of drugmakers have also entered the specialty pharmacy space, with more than a dozen companies now competing to fill the void.
Pharmaceutical companies have struggled with declining profits.
For example, generic drug sales fell in 2016 for the first time in five years, while sales of branded drugs also dipped, a sign of the waning demand for generic drugs.
But the trend is reversing, with generic sales increasing more than 10 per cent last year compared with a year earlier, according to data from Euromonitor International.
The industry has been experiencing some of its steepest declines in recent years.
On Friday, drugmaker Johnson & Johnson closed its pharmacy division, a move that could result in more competition for its specialty drug business.
In a statement, Philips, the world’s largest pharmaceutical company, said it was “delighted” to have the opportunity to explore new opportunities for its pharmacy, which was a key driver of the company.
“Philips will continue to focus on providing its pharmacy service, and will continue the successful development of a global pharmacy network,” Philips said.
In 2015, Philips reported a loss of $1 per share, down from a profit of $4 per share in 2016.
Pharmacy profits are down in other industries as well.
Last year’s revenue from the wholesale drug business, which includes prescription drugs, fell 5 per cent from $4 billion in 2015 to $3.5 bn, and the company reported that it was the first year in its history that it lost money from its wholesale business.