Drug company earnings soar
NEW YORK (AP) – Bristol-Myers Squibb Co.’s profit soared 91 percent in the second quarter helped by a one-time tax benefit, while sales growth helped push up earnings at rival drugmakers AstraZeneca PLC by 50 percent and GlaxoSmithKline PLC by 7 percent. AstraZeneca, the Anglo-Swedish company behind the drugs Crestor and Nexium, also said Thursday that Chief Executive Tom McKillop will retire at the start of next year and be replaced by David Brennan, the head of U.S. operations who joined the board in March.
New York-based Bristol-Myers said its earnings rose to $1 billion, or 50 cents a share, in the April-June period from $527 million, or 27 cents a share, a year earlier. Bristol-Myers had set aside $294 million more than necessary to pay taxes, and that was added to this quarter’s results. Last year’s results were depressed by a litigation charge of $455 million. Excluding certain items, the company earned $933 million, or 47 cents a share, much higher than the 36 cents-a-share average estimate of analysts surveyed by Thomson Financial. The items included $269 million in increased litigation reserves and $85 million for the early retirement of debt. Sales grew by 1.5 percent to $4.89 billion from $4.82 billion. Bristol-Myers continued to be dogged by patent expirations on major drugs, although new products performed well.
Revenue from diabetes drug Glucovance dropped 74 percent to $12 million, while cancer drug Paraplatin sales plunged 86 percent to $33 million.
But sales of AIDS drug Reyataz more than doubled to $183 million, while revenue from anti-psychotic drug Abilify jumped 97 percent to $240 million. Sales of anticoagulant Plavix rose 26 percent to $968 million. Plavix is marketed with Sanofi-Aventis SA and faces a patent challenge.
The company also announced the U.S. Food and Drug Administration would review its new medicine for rheumatoid arthritis, Abatacept, as well as Paragluva, a diabetes product, in early September.
Bristol-Myers agreed last month with the Justice Department to pay $300 million to defer prosecution related to its fraudulent manipulation of sales and income. A portion of the $269 million litigation reserve boost is a result of the settlement.
The company paid wholesalers generous incentives to stockpile inventory, inflating financial results and forcing the company to restate $900 million in profits and $2.5 million in revenue logged from 1999 though the first half of 2002. Bristol-Myers had doled out about $800 million to settle lawsuits and investigations tied to the matter.
Bristol-Myers CEO Peter Dolan said the company expects annual results to reach to the high end of its previously disclosed $1.35 a share to $1.45 a share forecast that excludes unusual items. Bristol-Myers shares rose 27 cents to $25.37 in afternoon trading on the New York Stock Exchange. AstraZeneca said second-quarter net income jumped 50 percent to $1.22 billion from $816 million. Sales rose to $6.13 billion from $5.29 billion. Sales of acid reflux medicine Nexium rose 35 percent to $1.2 billion while sales of Crestor jumped 53 percent to $317 million.
“Strong sales growth and productivity gains have delivered an outstanding first-half performance leading to higher shareholder returns and an increase in financial targets for the full year,” said McKillop, its CEO who was initially due to retire in March when he turned 62, but agreed to stay on while new Chairman Louis Schweitzer settled into his job.
Crestor is regaining market share following a decision by the U.S. Food and Drug Administration in March to deny a petition by the Public Citizen’s Health Research Group to remove the cholesterol drug from the market. Public Citizen had claimed that Crestor caused rhabdomyolysis, which is a breakdown of muscle fibers into the bloodstream that could cause kidney damage.
The FDA said the drug was safe and effective when patients follow the prescription’s information.
Brennan said that the company is still “shooting” for Crestor to reach a 20 percent share of the U.S. market. Its share of new prescriptions in the U.S. statin market was 6.2 percent in the week ending July 15, the company said.
AstraZeneca has struggled to regain investor confidence in recent months after the troubles with Crestor, a clinical trial showing that its lung cancer drug Iressa did not help patients live longer and the rejection by U.S. authorities of its anticoagulant Exanta.
Its shares rose 5.9 percent to 2,487 pence ($43.66) in London.
Britain’s GlaxoSmithKline said its profit rose to 1.19 billion pounds ($2.08 billion) in the April-June period from 1.11 billion pounds a year ago. Revenue rose 5.5 percent to 5.25 billion pounds ($9.18 billion) from 4.97 billion pounds.
Glaxo launched two new products in the United States during the quarter – its osteoporosis drug Boniva and its Requip medication for restless legs syndrome.
Its shares rose 0.9 percent to close at 1,340 pence ($23.51) on the London Stock Exchange.
The growth in Glaxo’s earnings came despite a four-month disruption in the supply of anti-depressant Paxil CR and diabetes drug Avandamet to the United States.
Production of these drugs was suspended at the company’s plant in Cidra, Puerto Rico, in March after the U.S. Food and Drug Administration declared that the production process failed to meet minimum manufacturing standards.
The FDA found that Paxil CR tablets could be split apart and some Avandamet tables did not have the correct dose of one active ingredient. Paxil was returned to the market in June and Avandamet in July.
Overall sales were led by a 22 percent rise in sales of asthma drug Seretide/Advair to 725 million pounds ($1.27 billion) and a 16 percent jump in sales of diabetes treatment Avandia/Avandamet to 352 million pounds ($616.36 million).
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Associated Press Business Writer Jane Wardell in London contributed to this report
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AP-ES-07-28-05 1548EDT