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Medco says 2008 growth "sustainable"

Wed Nov 14, 2007 2:34pm EST

Reporter's Notebook

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By Lewis Krauskopf and Bill Berkrot

NEW YORK (Reuters) - Medco Health Solutions Inc's (MHS.N: Quote, Profile, Research, Stock Buzz) expected 2008 growth rate of more than 20 percent is sustainable over the next few years as the company benefits from a wave of major brand-name medicines becoming available as generics, Chief Executive David Snow said on Wednesday.

The pharmacy benefit manager (PBM) will capitalize on drugs with more than $60 billion in annual sales losing patent protection by 2012, Snow said at the Reuters Health Summit in New York. Medco profits more from generic drugs than pricier brands.

The company, whose shares have nearly doubled this year, is already expecting 31 percent to 33 percent earnings growth for 2007.

"We've just given new guidance for '08 that's 21 to 27 percent GAAP (earnings per share) growth," he said.

"The question is, is that sustainable? It is, I believe, sustainable based upon the things Medco is doing uniquely."

Pharmacy benefit managers administer prescription drug benefits for employers and health plans and operate large mail-order pharmacies.

Snow said generics could make up 80 percent of prescription drugs by 2012, up from the current 60 percent.

The one wild card that could slow that pace would be new breakthrough medicines that draw people away from generics, he said. Such breakthroughs would likely come from biotechnology, he said.  Continued...

 
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