A Look at Alexion Pharmaceuticals’ Operational Performance

Gross margins

Alexion Pharmaceuticals’ (ALXN) cost of sales decreased from $157.0 million in the third quarter of 2017 to $90.6 million in the third quarter of 2018. Its gross margin contracted from 91.73% in the third quarter of fiscal 2017 to 91.5% in the latest quarter.

For fiscal 2018 and 2019, Alexion Pharmaceuticals’ gross margins are expected at 91.08% and 91.22%, respectively, as compared with gross margins of 91.95% for fiscal 2017. In comparison, fiscal 2018 gross margins for peers Abbott Laboratories (ABT), Amgen (AMGN), and Johnson & Johnson (JNJ) are expected at 59.29%, 85.73%, and 70.43%, respectively.

A Look at Alexion Pharmaceuticals’ Operational Performance

Operating expenses

Alexion Pharmaceuticals incurred selling, general, and administrative expenses of $258.7 million in the third quarter of 2018 as compared with $270.6 million in the third quarter of 2017. This decrease was due to the lower salary, benefits, and other labor expenses resulting from lower headcount.

Its research and development expenses also decreased from $195.7 million in the third quarter of 2017 to $174.8 million in the third quarter of 2018 due to lower external clinical development and product development expenses. Alexion’s restructuring expenses decreased from $72.0 million in the third quarter of 2017 to $10.3 million in the latest quarter.

The company’s total operating expenses decreased from $622.0 million in the third quarter of 2017 to $577.3 million in the third quarter of 2018. The increase in the top line coupled with its superior operational performance helped Alexion increase its operating income from $80.1 million in the third quarter of 2017 to $358.6 million in the third quarter of 2018.

We’ll take a look at Alexion Pharmaceuticals’ bottom-line trend and recent acquisitions in the next part.