Strong revenue growth
United Therapeutics (UTHR) expects to earn revenue exceeding $1.5 billion in 2016. By 2020, the company also expects to surpass its goal of $2 billion in annual revenue.
If the company manages to achieve these revenue targets, we could see a positive impact on the stock as well as the iShares Core S&P Mid-Cap ETF (IJH). United Therapeutics makes up about 0.37% of IJH’s total portfolio.
United Therapeutics expects an increase in research and development (or R&D) expenses, as the company is currently involved in six Phase 3 studies as well as multiple other drug device combination studies. However, despite this increased spending, the company expects to maintain its profit margins for fiscal 2016.
Oral pulmonary arterial hypertension (or PAH) drug Orenitram continued to witness strong patient demand in 2016. However, inhaled PAH drug Tyvaso’s revenues suffered a modest drop in 3Q16. This drop is due to the annual 25% patient attrition that the drug faces due to patients switching to Remodulin and other therapies as the disease progresses to the next stage. Further, patients have a higher tendency to continue with oral therapies. So there are times when the dropping demand for Tyvaso is not offset by patients switching from failing oral therapies.
In the next part of this series, we’ll analyze the growth drivers for Tyvaso in greater detail.