Aug 28, 2017

Pharma leads profitable second quarter for health care

Brand-name pharmaceutical companies and health insurers increased their profits in the second quarter of this year, while hospitals and drug distributors had a more difficult run, according to a review of financial documents for 58 publicly traded health care companies.

Between the lines: Drug companies continue to raise their list prices for branded drugs despite the public furor, so they naturally maintained their status as the most profitable sector in health care. Insurers also collected higher profits because fewer people are going to the hospital or doctor, which results in more money staying in their pockets.

Data: Securities and Exchange Commission filings; Chart: Andrew Witherspoon / Axios
  • Thirteen companies recorded net profit margins of at least 17% in the second quarter of this year, and almost all of those margins were higher when compared with the same period of 2016. Of those 13 companies, 12 were pharmaceutical firms. Gilead Sciences, the manufacturer of pricey hepatitis C and HIV drugs, had the largest profit margin at 43%.
  • The big five health insurers — Aetna, Anthem, Cigna, Humana and UnitedHealth Group — each scored higher second-quarter profit margins compared with 2016. Cigna's was the highest at 7.9%.
  • The second quarter was extremely tight for AmerisourceBergen, Cardinal Health and McKesson, the three dominant drug distributors. All of their profit margins dipped below 1% due to falling generic drug prices.

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