Jazz Pharmaceuticals: Will It Hit a High Note or Low Note?
Product sales in fiscal 2015
Jazz Pharmaceuticals’ (JAZZ) only reportable segment is product sales. The three key commercialized products in its portfolio include Xyrem, Erwinaze (or Erwinase), and Defitelio. Whereas Xyrem is part of the sleep portfolio, the others are hematology or oncology drugs.
Xyrem, Jazz’s leading product, fetched $955 million for the company during fiscal 2015, resulting in ~23% annual revenue growth. From fiscal 2012, the product’s contribution rose from 65% of the company’s total revenue to 72.5% in fiscal 2015.
The revenue from Erwinaze (or Erwinase) grew to $203.3 million in fiscal 2015, resulting in a marginal 2% growth that year. Following supply disruptions, revenue from the drug fell in the fourth quarter of fiscal 2015.
The products of the company target ultra-rare and rare diseases. Other companies that operate in similar segments include Alexion Pharmaceuticals (ALXN), BioMarin (BMRN), and Genzyme, a wholly owned subsidiary of Sanofi (SNY).
The United States is the major market for Jazz Pharmaceuticals, fetching ~90% of its total revenue in fiscal 2015. The revenue from Europe, amounting to ~8% of the company’s total revenue, was its second-largest market during the year.
The success or failure of any pipeline results in share price volatility for the company. To avoid such direct risk, investors could invest in options that provide diversified exposure, such as the iShares Russell Mid-Cap ETF (IWR). 0.15% of its total holdings are invested in Jazz Pharmaceuticals.
In the next part of this series, we’ll discuss the revenue and operating expense expectations for Jazz Pharmaceuticals during fiscal 2016.
Browse this series on Market Realist: