US-based Organon Inc. (NYSE: OGN) has released its Q4 and full-year 2022 financial results. Global revenues fell 7% year-on-year (YOY), but were up 1% when excluding foreign exchange effects, reaching USD 1.485 billion in Q4. Over the 12-month period, global revenues dipped 2% (or +4% excluding FX) to USD 6.2 billion. Organon’s share price suffered a significant 15.0% fall by the close of trading yesterday.
Q4 Challenges and VBP Impact
Among the negatives for Organon during Q4 was a USD 15 million impact from the volume-based procurement (VBP) program in China. The high cholesterol drug Ezetrol/Zetia (ezetimibe) was included in VBP Round 7, which took effect from November. CFO Matthew Walsh noted during the earnings conference call that there was considerable foreign exchange impact throughout 2022, a particularly significant factor for Organon since the firm generated 75% of its revenues from outside the US home market.
Business Unit Performance
Focusing on business units, over the 12 months:
- Women’s Health revenues reached USD 1.673 billion, up 7% YOY excluding foreign exchange impacts.
- Biosimilars reached USD 481 million, up 17%.
- Established Brands expanded 3% to USD 3.874 billion.
- Others dipped by 27% to USD 146 million.
The 2023 guidance is for revenues between USD 6.15 billion and USD 6.45 billion.
China Market Performance
In China, Q4 sales reached USD 194 million, down from USD 240 million in the same period the previous year. Revenues over the 12 months reached USD 917 million, down from USD 933 million in 2021. The impact of COVID-19 lockdown conditions followed by the wave of infections significantly dampened Organon’s fertility treatment sales in the market.
2023 Outlook and VBP Impact
In 2023, the China retail market is expected to rebound strongly following the end of pandemic controls, as is the fertility business with sales of Follistim (follitropin beta) expected to benefit. However, the ongoing VBP erosion of Ezetrol sales has produced a USD 90 million negative impact on the China business in the year-to-date, according to CEO Kevin Ali, speaking during the earnings conference call. Ali noted that while further products are expected to be included in rounds 8 and 9 of the VBP, these “are much smaller products, somewhere in the USD 40 million range,” and the impact of VBP tendering on Organon’s portfolio should be absorbed during 2023. This means that “we see really strong robust growth after 2023. So in 2024 and beyond, don’t be surprised if you start to see high single-digit, low double-digit performance coming out of China.”-Fineline Info & Tech
