How Will Vertex Solve Its Falling Revenue Woes?



Vertex Pharmaceuticals

Vertex Pharmaceuticals (VRTX) makes up 1.19% of the Health Care Select Sector SPDR ETF (XLV). It has a market cap of ~$31 billion. At present, Vertex has two approved drugs in its portfolio, Kalydeco and Orkambi. In this article, we will examine how the company has performed over the past six years.

The above graph shows Vertex’s revenue over the last six years. So far, 2012 was the best year for the company with revenues of $1.52 billion. Since 2012, revenue has been declining. In 2014, revenues dropped sharply from $1.2 billion in 2013 to $580.41 million. The decline was mainly attributable to the decline in the revenue from Incivek. In 2014, revenue from Incivek was recorded at $24.1 million, whereas in 2013 revenues were $466.3 million. Can vertex recover from the sliding revenue it has posted?

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Will Orkambi revive Vertex?

In the year 2015, Kalydeco reported revenue of $130.2 million in 1Q15 and reported $154.9 million in 2Q15. The company also revised Kalydeco revenues from $575 million to $590 million. Orkambi was approved by the FDA (Food and Drug Administration) on July 2, 2015. The drug is used in the treatment of cystic fibrosis for people aged 12 and older. Vertex has sought approval from the European Medicines Agency, Health Canada, and Australia’s Therapeutic Goods Administration to launch the drug in Europe, Canada, and Australia. It remains to be seen if Vertex’s efforts to launch Orkambi on a global level will be the answer to the company’s declining revenue.

XLV’s portfolio includes stocks like Johnson & Johnson (JNJ), Pfizer (PFE), and Gilead Sciences (GILD).


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