Monday July 20, 4:15 pm Eastern Time
Warner-Lambert profits jump 46 percent as drug sales soar
(adds details, quotes, analysis)
By Ransdell Pierson
NEW YORK, July 20 (Reuters) - Warner-Lambert Co. said Monday its second-quarter profits vaulted 46 percent to $338 million as prescription drugs sales jumped 71 percent.
The company, which also produces consumer products such as Dentyne gum and Schick razors, said its diluted per-share earnings jumped 43 percent to 40 cents in the second quarter, 3 cents above the consensus estimate of analysts polled by First Call.
Following the surprisingly strong earnings report, Warner-Lambert's stock jumped $5.75, or 7.2 percent, to $85.31 in heavy trading on the New York Stock Exchange, where it was among the 10 most actively traded issues.
Analysts said the shares were also helped by news on Monday that the Food and Drug Administration had granted marketing approval of the antidepressant drug Celexa (citalopram).
The company said revenues grew 30 percent to $2.56 billion in the quarter and would have risen another 4 percentage points if not for the strong dollar, which reduced the value of overseas sales.
''The rapid and continued acceptance of our new pharmaceutical products is driving our sales growth beyond our earlier expectations,'' Chief Executive Melvin Goodes said in a statement, adding sales growth ''was powered by impressive unit growth of 38 percent.''
Goodes raised his earnings guidance for 1998 based on gangbuster drug sales, saying he expected diluted earnings per share to rise 40 percent this year. On April 22, Goodes told analysts he expected 1998 earnings growth of at least 35 percent.
Warner-Lambert, which is based in Morris Plains, N.J., said worldwide sales of its prescription drugs jumped 71 percent to $1.41 billion in the quarter, led by a more than doubling of U.S. sales to $966 million.
Two prescription drugs launched in early 1997 paced the sales increase -- cholesterol-lowering agent Lipitor (atorvastatin) and Rezulin (troglitazone) for treatment of Type 2 diabetes.
Worldwide sales of Lipitor, the most potent of a newer ''statin'' class of anti-cholesterol drugs, more than tripled to $533 million for the quarter. Launched in March 1997, Lipitor was the first drug to
rack up $1 billion in sales in its first 12 months on the market.
Sales of Rezulin, meanwhile, almost tripled to $226 million compared with the 1997 quarter, the company said.
''Everything looks great for Lipitor and Rezulin, the company's two engines of growth, and because of that people will be raising their earnings estimates for Warner-Lambert today,'' said ABN AMBRO pharmaceuticals analyst Mario Corso.
Corso said annual sales of Lipitor were now trending at over $2 billion, helped by the fact the drug is co-marketed by Pfizer Inc.
Some other financial analysts were predicting potential Lipitor annual sales of up to $6 billion, Goodes told CNBC television on Monday.
Asked about how he might put the company's soaring revenues to use, Goodes said he would continue to forge drug collaborations with other companies. But he added, ''I'm not interested in doing hostile takeovers.''
Hambrecht & Quist analyst Alex Zisson said Rezulin was doing ''extremely well'' despite some lingering safety concerns about the Type-2 diabetes drug.
Concerns were raised last December when the U.S. Food and Drug Administration told doctors to monitor patients after some people using the drug suffered liver failure and three died.
Glaxo Wellcome Plc, which sold troglitazone under the brand name Romoxin, suspended sales in December because of the adverse drug reactions reported in the United States.
''Rezulin sales are off to the races again, which shows the safety concerns were not a knife to its heart,'' said Gruntal & Co. analyst David Saks.
Warner-Lambert said revenue growth was augmented in the second quarter by anticonvulsant Neurontin (gabapentin), whose worldwide sales rose 71 percent to $122 million, and hypertension drug Accupril, which grew 22 percent to $119 million.
The company said its consumer health products -- including Benadryl allergy products and Sudafed cold and sinus products -- had worldwide sales of $676 million, virtually unchanged from the 1997
quarter.
It said sales of $468 million in confectionary products -- including Dentyne gum, Certs mints and Bubbaloo gum -- reflected a slight rise from the same period a year ago. |
