By Tess Stynes TAKING THE PULSE: Major U.S. drug makers will be coping with the loss of market exclusivity on a number of blockbuster drugs during the past year and the entry of lower-priced generic competition. Pharmaceutical firms have been striving to bolster their drug pipelines and control costs, contributing to a raft of deals and collaborations in the broader sector, as it struggles to cope with an industrywide patent cliff. COMPANIES TO WATCH: Johnson & Johnson (JNJ) - reports July 17 Wall Street Expectations: Analysts polled by Thomson Reuters most recently forecast earnings of $1.29 a share and revenue of $16.7 billion. A year earlier, the company earned $1 a share, or $1.28 a share excluding restructuring charges, litigation expenses and recall costs. Revenue was $16.6 billion. Key Issues: Johnson & Johnson's new chief executive, Alex Gorsky, who took the helm in late April from former chief William Weldon, has identified fixing problems at the health-care giant as a top priority. In addition to recovering from a string of recalls in its consumer division, the company also has been hoping to settle a protracted investigation into marketing of the antipsychotic Risperdal. Last month JNJ said it plans to set aside an additional $600 million in its second quarter for potential legal settlements, including cases related to Risperdal. Investors also are likely to be watching for any details on the integration of its recently completed $19.7 billion acquisition of orthopedic products maker Synthes Inc., which it plans to integrate with it DePuy business. Anticlotting drug Xarelto, which J&J developed with Bayer AG (BAYRY, BAYN.XE), also has been in focus recently amid efforts to expand approved uses of the drug. Eli Lilly & Co. (LLY) - reports July 25 Wall Street Expectations: Analysts anticipate per-share earnings of 77 cents on revenue of $5.58 billion. A year ago, the company reported a per-share profit of $1.07, or $1.18 excluding restructuring charges, as revenue totaled $6.25 billion. Key Issues: Lilly, whose antipsychotic drug Zyprexa lost patent exclusivity in October, recently received a six-month reprieve on the approaching end of U.S. market exclusivity for its blockbuster antidepressant Cymbalta. The drug maker was granted exclusivity through December 2013 because the company studied the drug's effects on children. Like other pharmaceutical companies, Lilly has been working to fill its pipeline through acquisitions, its own research labs and by collaborating with several other major drug makers--including efforts in emerging markets such as India and China. Meanwhile, Bristol-Myers Squibb Co.'s (BMY) blockbuster blood-thinner Plavix went off patent in May, raising questions about how the entry of lower-cost generic products will impact Lilly's Effient, as well as AstraZeneca PLC (AZN, AZN.LN)'s Brilinta. Merck & Co. (MRK) - reports July 27 Wall Street Expectations: The company is seen reporting earnings of $1.01 and $12.2 billion in revenue. A year earlier, the company earned 65 cents a share, or 95 cents excluding acquisition-related and restructuring charges, on revenue of $12.15 billion. Key Issues: Merck, like its rivals, has been cutting costs as part of an effort to soften the hit from increased generic competition as the company gears up for the loss of patent exclusivity on its top-selling allergy and asthma medication Singulair in August. Merck also has been hurt by the ripple-effect from generic versions of rival Pfizer Inc.'s (PFE) cholesterol fighter Lipitor, which have contributed to a slower sales of Merck's anticholesterol drug Vytorin. Meanwhile, Merck recently said AstraZeneca won't exercise its option to acquire Merck's interest in their AstraZeneca L.P. partnership this year, putting any potential loss of its interest in heartburn drugs Prilosec and Nexium off by two years and clarifying the status of the partnership. Pfizer - reports July 31 Wall Street Expectations: Analysts expect a profit of 55 cents and $14.96 billion of revenue. The company posted a per-share profit of 33 cents--or 60 cents excluding restructuring and acquisition-related charges--on revenue of $16.99 billion. Key Issues: The world's biggest drug maker moved ahead with efforts to more closely focus on its pharmaceuticals business--including the planned $11.85 billion deal to sell its nutrition unit, which makes baby formula, to Nestle SA (NESN.VX, NSRGY). Pfizer last month said also said it is preparing to sell shares in its animal-health unit. Sales of cholesterol drug Lipitor are likely to remain a key focus. Once the highest-selling prescription drug in the world, sales have fallen off sharply since the Nov. 30 loss of its U.S. market exclusivity. Pfizer aggressively marketed Lipitor after the loss of market exclusivity, including discount card offers and deals struck by health plans to offer branded Lipitor at reduced prices to compete with generic versions. However, Pfizer officials said in May it would no longer negotiate new contracts with health plans to sell Lipitor. Starting June 1, production of Lipitor was opened up to more manufacturers. (The Thomson Reuters estimates and year-earlier earnings may not be comparable due to one-time items and other adjustments.) Write to Tess Stynes at Tess.Stynes@dowjones.com
