Drugmakers' 4th-Qtr Profits Rise as Ads Pitch Pills
Madison, New Jersey, Jan. 26 (Bloomberg) -- Drugmakers led by Schering-Plough Corp., maker of the world's best-selling allergy remedy, reported higher fourth-quarter profits as consumers followed advice given in a barrage of new ads and asked their doctors for more prescriptions.
Schering-Plough's fourth-quarter profit rose 22 percent as ads for its allergy drug Claritin appeared everywhere from television to United Airlines luggage tags. Merck & Co.'s profit rose 13 percent as the world's biggest drugmaker advertised a money-back guarantee for its cholesterol reducer Zocor.
Doctors say patients are requesting more brand-name drugs since the U.S. Food and Drug Administration loosened its rules in 1997 on what drugmakers could say about prescription medicines in television ads. Health insurers have helped feed demand with prescription plans that let patients pay as little as $5 or $10 for drugs that cost much more.
''It is easy for the consumers to say, 'I want Claritin' when the managed-care company is paying for 90 percent,'' said Todd Richter, an analyst at Morgan Stanley Dean Witter, who covers health insurers such as Aetna Inc.
Patients' Pockets
Still, the pace of growth in U.S. drug sales could slow over the next few years as health insurers try to pass more drug costs on to customers, analysts said. Some companies will pay only for drugs on approved lists. Insurers also are making agreements with employers now which require customers to pay higher payments for certain drugs.
''It'll be interesting to see'' if patients still demand high-priced drugs ''when they're funding the purchases out of their own pocket,'' said Morgan Stanley's Richter.
Schering-Plough
Schering-Plough's net income rose to $419 million, or 28 cents a share, from $343 million, or 23 cents, a year earlier, adjusted for a December 2-for-1 stock split. Results matched the 28-cent average estimate of analysts polled by First Call Corp.
Sales rose 16 percent to $2.06 billion for the Madison, New Jersey-based company. Sales of Claritin, which doesn't cause the drowsiness associated with older allergy medicines, rose 30 percent to $505 million. Sales of Schering-Plough's Intron-A for cancer and hepatitis, and Rebetron, a hepatitis treatment that includes Intron-A, rose 37 percent to $217 million.
Schering-Plough shares rose 11/16 to 52 5/8.
Merck
Net income for Whitehouse Station, New Jersey-based Merck rose to $1.4 billion, or $1.16 a share, from $1.24 billion, or $1.01, a year earlier. Sales rose 21 percent to $7.53 billion from $6.23 billion.
Merck's money-back guarantee helped keep Zocor sales growing during the fourth quarter, even as the Merck drug lost ground to Warner-Lambert Co.'s Lipitor, which appears to do a better job of lowering cholesterol at low doses. Zocor sales grew 11 percent to $1.12 billion, while Lipitor sales rose 73 percent to $704.9 million.
Merck's matched the $1.16-a-share average estimate of analysts polled by First Call Corp. Merck rose 2 13/16 to 140 5/16.
J&J
Profit before a restructuring charge for New Brunswick, New Jersey-based Johnson & Johnson rose to $693 million, or 50 cents a share, from $630 million, or 45 cents, a year earlier. Results matched the 50-cent average estimate of analysts polled by First Call Corp. Sales rose 13 percent to $6.37 billion.
J&J's profit rose as it sold more of the schizophrenia medicine Risperdal, which is less likely to cause side effects than are older, less expensive generic drugs for schizophrenia. Risperdal provides an example of how drugmakers are adding to profits by bringing out improved medicines.
''Consumers of health services want the best that money can buy, and the drugs are in many cases a whole lot better,'' said Sheryl Skolnick, an analyst at BancBoston Robertson Stephens, who covers the hospital industry and health insurers.
In the fourth quarter of 1998, charges of $610 million, or 44 cents a share, for restructuring made J&J's net income $83 million, or 6 cents a share. J&J rose 4 1/8 to 82 7/8.
American Home
American Home's profit before charges rose to $590.1 million, or 44 cents a share, from net income of $571.8 million, or 43 cents, a year earlier. Results were in line with the 43- cent average estimate of analysts polled by First Call Corp.
Sales declined 11 percent to $3.23 billion in the fourth quarter as the Madison, New Jersey-based company faced increased competition for its arthritis medicine Lodine. The June withdrawal of American Home's painkiller Duract also reduced sales. American Home compensated by cutting spending 11 perrcent on sales and general administration and 4.3 percent on research.
Charges totaling $240.5 million, or 18 cents a share, made net income $349.6 million, or 26 cents a share. American Home fell 3/16 to 51 7/8. |
