J.P. 摩根-美股-医疗科技行业-美国制药业：关于COVID-19对企业影响的思考-2020.4.28-31页.pdf

North America Equity Research28 April 2020Pharmaceutical DistributionThoughts on Impact of COVID-19 Across the Businesses;Updating Estimates Into the QuarterHealthcare Technology&DistributionLisa C.Gill AC(1-212)622-Bloomberg JPMA GILL Michael Minchak,CFA(1-212)622-Anne E.Samuel(1-212)622-J.P.Morgan Securities LLCSee page 27 for analyst certification and important disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.COVID-19 is having far reaching impacts across our broader coverage universe.In the following note,we discuss the impacts on the pharmaceutical distributors,including around the core drug distribution business as well as across the companies various ancillary businesses.We also discuss our estimate changes and provide thoughts heading into the C1Q20 results.We remain positive on the broader pharma distributor group given an improving fundamental backdrop,and highlight OW-rated AmerisourceBergen(ABC)and McKesson(MCK)as our favorite names.Broadly speaking,we see the core pharmaceutical distribution business as somewhat more insulated from COVID-19 impacts.At this point,we dont expect a material impact on script volumes,outside of the pull-forward in March,as well as a minor impact from fewer acute scripts tied to elective procedures and new to brand scripts due to fewer physician office visits(although we view this as temporary).We see some minor impact to the specialty distribution business as volumes for specialty drugs administered in the office setting(e.g.,oncology and other complex conditions)have seen a decline in the past few weeks.Impact to ancillary businesses likely to be more significant in the near term.Each of the companies has expanded into other vertical markets and geographies,some of which may be more exposed in the near term to COVID-19 related disruption.For example,we see a larger impact on medical supply distribution given the significant decline in elective surgeries and procedures and physician office visits over the past few weeks(impacting CAH and MCK).Other company-specific impacts could be seen around animal health distribution(impacting ABC),retail pharmacy(impacting MCK)and nuclear pharmacy(impacting CAH).We are updating estimates to reflect COVID-19 headwinds across the various businesses,which we expect to drive a headwind in C2Q20 and C3Q20(see below).Table 1:Adjusted EPS Estimate ChangesFY20EFY21EC1Q20EC2Q20EC3Q20EC4Q20EABC(new)$6.89$8.33$2.24$1.39$1.49$1.94ABC(old)$7.74$8.34$2.26$1.96$1.76$1.94CAH(new)$4.67$5.32$1.36$0.51$0.99$1.53CAH(old)$5.32$5.60$1.42$1.11$1.27$1.53MCK(new)$14.76$13.76$4.08$2.09$3.11$4.09MCK(old)$14.77$15.89$4.09$3.50$3.78$4.10Source:J.P.Morgan estimates.Key focus on C1Q earnings to be commentary on recent trends in April/early May.We expect C1Q results to be favorable due to the pull-forward of Rx sales into March and only about two weeks of COVID-related disruption.While it is unclear whether the companies will update existing guidance at this point given ongoing uncertainties around the severity of the outbreak and the duration of containment measures,we look for color on key puts and takes across the businesses and commentary on recent trends to extrapolate as we look ahead.MCK typically provides initial guidance for the coming year with F4Q earnings,although we would anticipate a wider range for FY21 than in the past given ongoing uncertainties.2North America Equity Research28 April 2020Lisa C.Gill(1-212)622-Equity Ratings and Price TargetsMkt CapRatingPrice TargetCompanyTicker($mn)Price($)CurPrevCurEnd DatePrevEnd DateAmerisourceBergenABC US18,838.3990.78OWn/c106.00Dec-20n/cn/cCardinal HealthCAH US15,267.4251.93Nn/c62.00Dec-20n/cn/cMcKesson CorporationMCK US25,790.40143.28OWn/c187.00Dec-20n/cn/cSource:Company data,Bloomberg,J.P.Morgan estimates.n/c=no change.All prices as of 27 Apr 20.3North America Equity Research28 April 2020Lisa C.Gill(1-212)622-Adj.EPS Estimate Changes$FY20EFY21ECompanyBBG TickerPeriodPrevCurPrevCurConsPrevCurConsAmerisourceBergenABC US2Q20E2.262.24(0.02)7.746.89(0.86)7.508.348.33(0.01)8.16Cardinal HealthCAH US3Q20E1.421.36(0.06)5.324.67(0.65)5.235.605.32(0.28)5.52McKesson CorporationMCK US4Q20E4.094.08(0.02)14.7714.76(0.02)14.7815.8913.76(2.13)15.48Source:Bloomberg,J.P.Morgan estimates.4North America Equity Research28 April 2020Lisa C.Gill(1-212)622-Thoughts on Impact from COVID-19Traditional Pharmaceutical DistributionWe note that total script volume was up 1.9%y/y in the first 8 weeks of 2020(January and February).March was up 5.1%y/y due to pull forward as many insurers waived early refill restrictions and more scripts were filled for 30 days supply(per IQVIA data,within chain pharmacies,the percentage of scripts filled for 90 days has increased to 25.8%in the week ending April 10,up from the 21.7%pre-COVID baseline).As a result,script volumes have since declined,with the first three weeks of April down 8.3%y/y.We believe this pull-forward of prescription volume will drive revenue upside in pharma distribution revenues across the group in C1Q(we estimate that this added 100-200 bps of incremental growth in C1Q across the group),although this will turn to a headwind in C2Q.Figure 1:Total Weekly Script Volumescripts in millionsSource:IQVIA:National Prescription Audit(NPA).Note:Week 1 in 2019 ended 1/11/2019;Week 1 in 2020 ended 1/10/2020.Mail penetration is up 52 bps y/y since early March,and has moderated slightly after a sharp increase in mid-March,which saw mail penetration increase by over 100 bps y/y).We note that each of the big three distributors counts one of the three largest mail pharmacies as a customer(AmerisourceBergen is the distributor for Express Scripts,while Cardinal Health has a relationship with OptumRx and McKesson works with Caremark).While there has been some concern over the potential impact of channel shift for the distributors(as mail order is generally lower margin compared to direct store delivery),we dont believe the channel shift is significantenough at this point to drive a material impact on margins.768084889296100Week1Week2Week3Week4Week5Week6Week7Week8Week9Week10Week11Week12Week13Week14Week152019 Total2020 Total5North America Equity Research28 April 2020Lisa C.Gill(1-212)622-Figure 2:Mail Penetration%of total retail+mail scriptsSource:IQVIA:National Prescription Audit(NPA).Note:Week 1 in 2019 ended 1/11/2019;Week 1 in 2020 ended 1/10/2020.While IQVIA data has shown that continuing scripts have returned to pre-COVID levels as of the week ending 4/17,new to brand scripts are 45%below baseline pre-COVID levels as a result of the decline in physician office visits.While telehealth visit volume has increased,and those physicians are able to prescribe medications,the number of telehealth interactions only partially offsets the decline of in-office visits.We also believe there could be a minor near term headwind from fewer inpatient and outpatient acute prescriptions that may be tied to elective surgeries and other procedures that have been deferred.This would include categories such as pain medications,antibiotics and anti-nausea drugs.While there has been an increase in certain medication classes as a result of COVID-19,including respiratory agents and anti-anxiety drugs,we do not believe this will fully offset the headwind.Both of these factors are likely to drive an incremental headwind to prescription volumes in C2Q,although we would expect this to be temporary effect and would expect new to brand scripts other acute scripts to rebound as office visits begin to ramp and elective procedures resume.Specialty DistributionAccording to data from IQVIA,specialty pharmaceutical sales in the U.S.were$245 billion in 2019,up 11%y/y,and compared to the overall market,which was up 6%y/y and traditional(non-specialty)drugs,which grew just 1%y/y.Specialty drugs accounted for roughly 48%of total prescription drug sales in 2019,up from 35%in 2014.While a larger portion of the specialty pharmaceutical market flows through the specialty pharmacy and retail pharmacy channels,the big three wholesalers also distribute specialty drugs that are administered in physician offices,clinics and institutions.We estimate this accounts for 40%of the total specialty market.Specialty distribution is heavily consolidated.AmerisourceBergen has a leading position in oncology products,reaching more than half of all community-based oncologists in the U.S.,and is also a leading distributor in the dialysis,blood plasma product and vaccine markets.We estimate that McKesson is the second largest specialty distributor,and has a significant presence through its U.S.Oncology business.Finally,Cardinal Health has a smaller presence in specialty distribution relative to its two peers,although the companys footprint did increase following the acquisition of Metro Medical in 2015.4.5%5.0%5.5%6.0%6.5%7.0%Week1Week2Week3Week4Week5Week6Week7Week8Week9Week10Week11Week12Week13Week14Week15201920206North America Equity Research28 April 2020Lisa C.Gill(1-212)622-Table 2:Specialty Distribution Revenue(CY19E)$in billionsCY19E Revenue%of Total RevenueAmerisourceBergen$4022%Cardinal Health$1812%McKesson$2712%Source:J.P.Morgan estimates.Per the latest update from IQVIA,in-office administered oncology therapies are down over the four weeks ending April 10,with therapy volume down from 5-15%vs.the pre-COVID baseline,with the percentage change varying by type of therapy(chemotherapy agents and targeted and biologic infused agents generally down in the single digit range).While key office-administered oncology therapies had generally shown resilience in March,IQVIA had noted that a softening was expected in overall trends in the near term as visits and new diagnoses are declining,and as practices adjust their capacity,prioritization,staffing and scheduling.We note that office visits and scripts in other specialty categories,such as multiple sclerosis and RA were also trending down in late March.Medical Supply Distribution(CAH and MCK)Cardinal Health and McKesson both participate in the medical supply distribution market,although Cardinal focuses primarily on the acute care setting(but does also have a presence in the home health market),while McKesson focuses on the alternate site market.Table 3:Medical Supply Distribution(FY19)$in billionsFY19 Revenue%of Total RevenueFY19 Adj.EBIT$of Total Adj.EBITCardinal Health$15.610.7%$0.5824.4%McKesson$7.63.6%$0.6116.0%Source:Company reports,J.P.Morgan estimates.IQVIA pointed to a decline in physician office visits in excess of 60%by late March(and has generally stabilized at this rate),while a recent report by the Commonwealth Fund pointed to a nearly 60%decline in visits to ambulatory practices in mid-March and noted that it has remained in the mid-50%range through the first half of April.We believe this would lead to a similar reduction in consumable supplies used in the normal course of running a physician office.While a portion of in-office care hasshifted to telehealth,these interactions do not require the need for medical supplies.While there is likely to be some pent up demand once things start to re-open around care that was deferred,we believe the main issue will be capacity.We point to a similar weakness in the acute care setting,where admissions and procedures are down sharply,even factoring in incremental COVID patients.Last week,HCA,the largest publicly-traded hospital operator in the U.S.,noted that through the first three weeks of April,inpatient admissions were down about 30%y/y,ER visits were down 50%y/y and hospital-based outpatient surgeries were running about 70%below the prior year due to the deferral of elective procedures.This is leading to lower sales of consumable supplies,physician preference items used in surgeries,custom surgical kits,etc.While strong demand of personal protective equipment(PPE),including higher margin private label products could potentially help to soften the impact,we would still expect a significant headwind in the near term.Some states,including Texas,New York and Colorado have recently 7North America Equity Research28 April 2020Lisa C.Gill(1-212)622-discussed a resumption in some outpatient elective procedures,which could point to an uptick going forward.That said,while there is likely to be pent up demand,similar to physician visits,we believe the main issue will be capacity.Manufacturer ServicesThe global COVID-19 pandemic has impacted clinical trials,as many large pharma companies paused certain ongoing clinical trials and delayed initiating new ones,as a result of travel restrictions in certain geographies,and as the risk of infection at trial sites,such as hospitals,limit patient interaction,enrollment,and data collection.This could have an impact on ABCs World Courier business,although most other manufacturer services that are performed across the group is not related to clinical trial support,but instead on commercialization services,which we see as being somewhat less impacted as these services are generally for products that are already approved and on the market.AmerisourceBergens commercialization businesses generated$3B in revenue in the past four quarters.This includes World Courier Group(WCG)and AmerisourceBergen Consulting Services(ABCS).WCG is a global specialty transportation and logistics provider for the biopharmaceutical industry.WCG specializes in logistics for global clinical trials,including temperature-controlled transportation,storage and worldwide distribution.The companys business is based on a fee-for-service model and revenues are not necessarily tied to the outcomes of clinical trials.ABCS provides services to pharmaceutical and biotech manufacturers,including commercialization support,reimbursement support programs,outcomes research,contract field staffing,patient assistance and co-pay assistance programs,adherence programs,risk mitigation services and other market access programs.These services are provided under a number of operating businesses,including:Xcenda,Lash Group and TheraCom.Cardinal Health has a robust services business focused upstream on manufacturers of specialty drugs,where the company provides consulting,patient support,logistics,group purchasing and other services supporting the development,marketing,distribution and payment for specialty pharmaceutical products.The companys services span the entire life cycle of a product,starting during the regulatory process and running through commercialization,and include services around adherence,reimbursement support,data and analytics.The company also offers comprehensive hub services for high-touch,high-value products.McKessons Life Sciences business comprises the companys manufacturer solutions bus