Birth Control Subsidies Slashed: Will Big Pharma Take A Hit?

By Kapitall | March 06, 2012 AAA

Written by Rebecca Lipman



Although the national debate over birth control continues to rage on, several states have already slashed birth control subsidies. Pharmaceutical companies that sell birth control should therefore be prepared to take a hit to revenues.
Americans spent $5 billion last year on birth control alone. Much of the sales are from generic brands but it's a growing market, especially as more drugmakers come up with new products.

To illustrate how large the business is: Bloomberg reports Bayer Pharma took in $1.5 billion from its birth control pills YAZ and Yasmin. Meanwhile, Merck reported over $600 million in sales from its Nuvaring.

Slashed Birth Control Subsidies
There are many birth control products, the most popular being "the pill." According to Planned Parenthood, birth control pills cost between $15 and $50 a month, depending on health-insurance coverage and the type of pill. On an annual basis, that means the pill costs between $160 and $600.


Due to state and federal government disputes, Montana and New Jersey have eliminated their state family planning programs. New Hampshire cut its funding by 57%, Texas cut its family planning by two-thirds and five other states made more modest program trims.

Reuters reports: Texas' state network, "which once provided 220,000 women a year free and low-cost birth control, cervical cancer tests and diabetes screenings, will now serve just 40,000 to 60,000... Another 130,000 low-income Texas women who get free exams and contraceptives through Medicaid could lose those benefits by month's end."

Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below.



Business Section: Investing Ideas
What do you think will happen to the firms who see large revenue streams from birth control products? Here are a few major pharmaceutical companies who currently manufacture popular birth control products: (Click here to access free, interactive tools to analyze these ideas.)

1. Church & Dwight Co. Inc. (NYSE: CHD): Develops, manufactures, and markets a range of household, personal care, and specialty products under various brand names in the United States and internationally. Market cap of $6.86B. Maker of Trojan brands of prophylactics and home pregnancy kits.

2. Johnson & Johnson (NYSE: JNJ): Engages in the research and development, manufacture, and sale of various products in the health care field worldwide. Market cap of $178.18B. Owns Ortho-McNeil Pharmaceutical, which makes diaphragms, and the oral contraceptive pill brands Ortho Tri-cyclen and Ortho-Evra.

3. Merck & Co. Inc. (NYSE: MRK): Provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. Market cap of $117.04B. Manufacturer of the NuvaRing.

4. Pfizer Inc. (NYSE: PFE): Pfizer Inc., a biopharmaceutical company, offers prescription medicines for humans and animals worldwide. Market cap of $162.08B. Manufactures the Depo-Provera Contraceptive Injection and birth control pills such as Lybrel and Loestrin.

5. Teva Pharmaceutical Industries Limited (Nasdaq: TEVA): Develops, produces, and markets generic drugs; and proprietary branded pharmaceuticals in various therapeutic categories and active pharmaceutical ingredients worldwide. Market cap of $42.46B. The company owns Barr Pharmaceuticals (which owns Duramed Pharmaceuticals) that produces various pharmaceuticals including women's health care products, oral contraceptives and intrauterine contraception.

Disclosure: Kapitall's Rebecca Lipman owns shares of Merck. Data sourced from Finviz.

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