Drugmakers to spotlight strategies, pipelines

By Ransdell Pierson

NEW YORK, Dec 3 (Reuters) - Earnings prospects for four of the world's largest drugmakers could become clearer over the next week as they host meetings with investors, where experimental drugs and cost-cutting strategies are expected to get top billing.

The companies -- U.S. drugmakers Merck & Co (MRK.N), Bristol-Myers Squibb (BMY.N) and Eli Lilly and Co (LLY.N) and London-based AstraZeneca Plc -- are girding for patent expirations that could soon make their products prey to generic rivals.

"In particular, we see positive catalysts from (the) Merck and Bristol Myers" events, Bank of America analyst Chris Schott wrote in a research note.

The stock of Merck, which has jumped 36 percent this year on booming sales of its new vaccines and recently approved Januvia diabetes treatment, could jump another notch if the company's 2008 profit forecast exceeds Wall Street expectations.

Merck will deliver its profit forecast in a conference call on Tuesday, ahead of a Dec. 11 meeting where marketing information about its current line of medicines and experimental drugs could also sway investors.

Promising Merck drugs now in or entering late-stage trials include Cordaptive, MK-524b and anacetrapib, which all raise "good" HDL cholesterol; a drug for migraine headaches called MK-974 that may not have heart risks seen with current treatments; and an obesity drug called taranabant.

"More-detailed insight into the late-stage pipeline could result in further upside to consensus (earnings) estimates" for Merck, Morgan Stanley analyst Jami Rubin said.

The new products, if approved, could help offset expected revenue declines when Merck osteoporosis treatment Fosamax faces generic competition next year and when patents lapse in 2010 and 2012, respectively, on hypertension treatment Cozaar and $4 billion-a-year asthma pill Singulair.

Bristol-Myers on Wednesday will announce a major restructuring and cost-cutting program, meant to maximize earnings growth as the company prepares for the patent expiration in 2011 on its biggest product, blood clot preventer Plavix.

Bristol-Myers could cut 10 percent of its work force in the next three years by halving its number of manufacturing facilities and heavily outsourcing production of its prescription drugs, said Deutsche Bank analyst Barbara Ryan.

"These efforts could save Bristol-Myers $500 million to $1 billion per year, for a cumulative total of $1.5 billion to $2 billion in savings," Ryan said in a research note.

Investors will also focus on Bristol's experimental drugs, including diabetes treatment dapagliflozin, apixaban to prevent blood clots, belatacept to prevent rejection of transplanted organs and depression treatment pexacerfont.

Lilly, meeting on Thursday in New York with investors, is expected to tout its experimental drugs as future revenue replacements for products facing patent expirations in coming years, including schizophrenia treatment Zyprexa, Cymbalta for depression and chemotherapy agent Gemzar.

Lilly's biggest hope is prasugrel, which in clinical trials was more effective than Plavix in preventing blood clots among heart patients, but increased risk of bleeding.

"We expect management to attempt to bolster confidence in prasugrel given the mixed results in the data," said Morgan Stanley's Rubin. She expressed concern that Lilly's experimental drugs won't come close to replacing revenues from drugs losing patent protection through 2014.

Anglo-Swedish drugmaker AstraZeneca Plc (AZN.L) at a meeting Friday in Gaithersburg, Maryland, is expected to defend its $15.6 billion acquisition of MedImmune earlier this year. The deal was seen by many critics as an act of desperation, following the failure of five AstraZeneca drugs in late-stage clinical trials in recent years.

Shares of the British-based group are trading around their lowest levels in two years, reflecting concerns about its thin drug pipeline and the threat of early generic competition to its three top sellers -- ulcer drug Nexium, Seroquel for schizophrenia and cholesterol fighter Crestor.

AstraZeneca is expected to stress how the integration of MedImmune gives it a capability in biologic medicines comparable to any major biotech company. (Additional reporting by Ben Hirschler in London)