Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : PFE (Pfizer) How high will it go? -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Big who wrote (7981)	6/24/1999 1:19:00 AM
From: margie	Read Replies (1) \| Respond to of 9523

Pliva Helped By Zithromax As Croatia Ails DJ INTERVIEW: By Geoffrey T. Smith ZAGREB (Dow Jones)--Profits at Croatia's Pliva d.d. (R.PLV) will hold up this year despite the Kosovo crisis and a domestic credit crunch, mainly because of abundant U.S. revenues from its star drug, Azithromycin, Chief Financial Officer Zeljko Peric told Dow Jones Newswires. Pfizer Inc. (PFE), which sells Azithromycin under license under the name of Zithromax, said global sales of the drug rose 44% in the first quarter of 1999 from a year ago to $441 million, generating badly needed royalties for Pliva as it struggles from one problem to the next in its established markets. Pliva is the largest pharmaceuticals group in Europe's countries in transition. Royalties, which accounted for around a sixth of group revenues last year, will also benefit from the dollar's rise on the foreign exchange market. Together with exports sales, some 60% of group revenues are in dollars or euros, while the bulk of its costs are in kunas. As a result, Peric says, the company should be able to increase net profit again this year, though not at last year's rate, when it rose 14% to 689 million kuna ($1=HRK7.3167, EUR1=HRK7.5955). When asked if a 10% rise is achievable, he said, "Everything is possible, but we do have several problems. If some of them are solved, then it's possible." Problems started to mount in 1998 as sales to Russia, formerly one of Pliva's most important markets, collapsed. Less visibly but just as seriously, wholesale customers who supply the Croatian State Health Fund started to run up huge arrears owing to late payment from the fund. Average wholesaler arrears are now more than 100 days. Receivables are up some 6% to 9% from the end of 1998, a year in which short-term receivables alone rose by 40%. Arrears Situation Has Stopped Deteriorating Peric said Pliva has some $70 million in unpaid bills from domestic wholesalers on its balance sheet. These are unhedged against a kuna devaluation, although the risk of that has receded now that the Kosovo crisis has eased. He adds, though, that there have been signs of improvement in the last few weeks. The Republic of Croatia has pumped much of a EUR150 million bridging loan into settling its agencies' arrears, hoping to break a vicious circle of nonpayment in the economy. "The situation is good regarding new deliveries and getting better," he said. The health fund "is trying to maintain new supplies and pay all current deliveries but the old debt is not being fulfilled completely." A supplementary budget that is expected to be approved by parliament on Thursday diverts a further HRK720 million to the health fund. In all, Pliva expects domestic sales to be flat this year, despite a severe first-half recession. Overall, he says, "we are satisfied (with current developments), but it isn't what we planned for 1999 two years ago. ... Without our royalty revenues, it would be very hard to complete our investment projects." The group is currently upgrading production facilities in Zagreb and building an oral solid forms plant in Poland, where it has now completed the last major acquisition it plans in the region. Concentration On Intermediate Compounds In Future The Polish acquisition is designed to serve as a bridgehead in emerging Europe's largest economy. In addition to the new plant at Cracow, the company has also increased its marketing staff in Poland to 100 from 20. Pliva expects sales in Poland to rise faster than the expected overall market growth of 10% a year. Operations in Poland have overshadowed another acquisition indicative of the group's longer-term strategy. In April, it bought Mixis Genetics Ltd. for $3.3 million, acquiring patents in a wide variety of basis proprietary compounds. Rather than look for a successor for Azithromycin, Pliva is specializing as a developer of intermediate compounds and agents that it can sell on to multinationals better able to bear the cost of clinical trials and global marketing. It thus has a memorandum of understanding to cooperate with Glaxo Wellcome PLC (GLX) in researching the next generation of macrolide antibiotics, and has also licensed Warner-Lambert Co. (WLA) unit Parke-Davis to examine the clinical potential of gastric peptides it has developed, which may be usable in the treatment of irritable bowel syndrome. Pliva expects Parke-Davis to decide by the end of June whether to take the peptide project any further. Also, the company is planning to sell its cosmetics and foodstuffs businesses. It aims to complete the sale later this year, unless the Kosovo crisis deters potential buyers from paying what it thinks is an appropriate price.