Warner-Lambert 4th-Qtr Profit Rises 45% on Lipitor (Update5, with analysts comments)
Bloomberg News
January 25, 1999, 5:02 p.m. ET
Warner-Lambert 4th-Qtr Profit Rises 45% on Lipitor (Update5)
Morris Plains, New Jersey, Jan. 25 (Bloomberg) -- Warner-
Lambert Co., one of the world's most-profitable drugmakers, said
fourth-quarter earnings rose 45 percent as it sold more of its
cholesterol-reducer Lipitor and the anti-diabetes pill Rezulin.
Net income rose to $341.1 million, or 40 cents a share, from
$235.7 million, or 28 cents, a year earlier. Results matched the
40-cent average estimate of analysts polled by First Call Corp.
Sales for Warner-Lambert, which also makes Dentyne gum and
Listerine mouthwash, rose 24 percent to $2.88 billion from
$2.33 billion.
While Lipitor has been one of the most successful U.S. drug
introductions ever, Rezulin has been controversial. The drug,
which can help some diabetics avoid the need for insulin shots,
has been linked to serious liver damage and more than 30 deaths.
U.S. regulators will review Rezulin's use in March.
''They're going to be under pressure until the March 26
meeting,'' said Barney Rosen, an Argus Research analyst who has a
''buy'' on Warner-Lambert. ''Everybody is waiting to see what
will happen.''
Shares of the Morris Plains, New Jersey-based company fell
9/16 to 67 3/8. Lipitor sales have grown so quickly that analysts
looked for the company to surprise them with an even better
earnings report, Rosen said.
''The Street expected that they were going to beat
expectations,'' he said.
1997 Introductions
Both Lipitor and Rezulin were introduced in 1997, and
they've turned what was once one of the least-successful drug
companies into one of the most profitable. Warner-Lambert expects
per-share earnings to rise 30 percent in 1999.
Lipitor sales rose 73 percent to $704.9 million in the
fourth quarter. The drug's sales more than doubled to
$2.2 billion in 1998 as it continued to gain market share at the
expense of competitors Merck & Co. and Bristol-Myers Squibb Co.
''The market's been growing quickly enough that Merck and
Bristol actually haven't lost dollar sales but obviously they
haven't gained as much as they would have had Warner been out of
the market,'' said Alex Zisson, an analyst with Hambrecht &
Quist.
Fourth-quarter sales of the company's diabetes drug Rezulin
rose 14 percent to $202.8 million. In 1998, Rezulin rose
78 percent to $748 million in sales.
Rezulin works for people with Type II diabetes, which
commonly begins in people over the age of 40. In Type II
diabetes, the body doesn't produce sufficient amounts of the
insulin needed to process sugar, which cells use for energy.
Rezulin helps diabetics' bodies more efficiently use their
limited supply of insulin.
'Wild Card'
Future Rezulin sales are something of a ''wild card,''
Hambrecht & Quist's Zisson said. As early as late 1999, Rezulin
could face competition from new drugs from SmithKline Beecham Plc
and a joint effort from Eli Lilly & Co. and Japan's Takeda
Chemical Industries Ltd.
So far, early research indicates the SmithKline drug,
Avandia, may have fewer side effects than Rezulin. Still, it's
too early to tell whether the U.S. Food and Drug Administration
would allow SmithKline to put fewer warnings on its label, said
Hemant Shah, an independent drug analyst.
''It's not a given that the FDA will give Avandia a better
label, at least not for some time,'' said Shah, who has a ''buy''
rating on Warner-Lambert.
The FDA last month disappointed rival drugmaker Monsanto
Co., for example, when it sought a better label for its new
painkiller Celebrex than rival medicines have. Monsanto showed
its drug was less likely to irritate the stomach and cause ulcer
than were other painkillers. Still, the FDA said Celebrex must
carry a standard warning about gastrointestinal problems.
--Kerry Dooley and Kristin Jensen in the Princeton newsroom
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