(Corrects analysts' revenue estimate in paragraph 5 to $33.55
billion from $31.04 billion; the story was earlier corrected to
fix analysts EPS estimate to $1.23 from $1.21. Both errors
occurred in an earlier version of the story)
Feb 7 Drug distributor Cardinal Health Inc
reported lower-than-expected quarterly revenue on
Tuesday, hurt in part by pricing pressure for generic drugs, and
cut its full-year adjusted earnings forecast for the second
Rival McKesson Corp slashed its fiscal year earnings
forecast in October as it raised concerns about aggressive
pricing tactics from competitors and the moderating pace of
branded drug price increases.
McKesson's comments sparked fear of a pricing war rippling
through the pharmaceutical supply chain.
Drug pricing has become a lightning rod for criticism with
several drugmakers coming under federal investigations.
Cardinal Health's quarterly revenue came in at $33.15
billion, missing analysts' average estimate of $33.55 billion,
according to Thomson Reuters I/B/E/S.
"While management tends to be conservative, we suspect that
price competition will have a negative impact on margins over
the coming quarters," William Blair analysts wrote in a client
Cardinal Health, which also makes surgical apparel and
gloves, cut its 2017 forecast for adjusted earnings from
continuing operations to $5.35-$5.50 per share from $5.40-$5.60.
Analysts had expected 2017 earnings of $5.44 per share.
"Pricing in the generic pharmaceutical market was a
significant headwind for our pharmaceutical segment profit,"
George Barrett, CEO of Cardinal Health said.
The pharmaceutical unit's profit fell 14 percent to $537
million, due to generic pharmaceutical pricing and loss of a
large pharmaceutical distribution customer.
"Pharmaceutical headwinds are more pronounced than
previously thought and ultimately carry more bottom-line
influence," Baird analyst Eric Coldwell wrote in a note.
Net income attributable to the company fell to $324 million,
or $1.02 per share, for the second quarter ended Dec. 31,
compared with $326 million, or 98 cents per share, a year
Excluding items, Cardinal Health earned $1.34 per share,
beating the estimates of $1.23.
(Reporting by Dipika Jain in Bengaluru; Editing by Anil D'Silva
and Shounak Dasgupta)