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Executive Summary

Zantac sales growth of 34% to $413.3 mil. during the last six months of calendar 1985 helped lift Glaxo corporate volume 16% to $994 mil. during that period. Zantac now accounts for over 40% of Glaxo's worldwide sales. Reflecting the impact of the Zantac growth, total corporate earnings advanced at a parallel pace. Operating earnings increased 32% to $239 mil. during the six month period that ended in December. At that level, Glaxo's operating profit-to-sales ratio is 24%. "Improvement in sales of products was broadly spread," Glaxo reported, "but the outstanding performers were ranitidine (Zantac), systemic cephalosporins, notably ceftazidime (Fortaz), and the anti-asthma product Ventolin (albuterol)." Ventolin, Glaxo's principal respiratory product, "has also continued to grow and has consolidated its position as the world's leading treatment for asthma," the company maintained. [EDITORS' NOTE: The dollar conversion rate for the figures in this story is $1.45 to the pound sterling -- based on exchange rates on Dec. 31, 1985.] Sales of Glaxo injectable antibiotics worldwide grew 48% to almost $119 mil. in the first six months of fiscal 1986, Glaxo reported. "The main contributor to this increase was ceftazidime," the company said. Commenting on the company's performance, Glaxo Chairman Paul Giorlami stated: "The growth rate was outstanding in the U.S. and we achieved good increases in most of our major markets, particularly in the U.K., Italy and France. The increase in sales was due almost entirely to volume growth." Approximately 83% of the company's sales, or $820.5 mil., were outside the U.K. However, sales in the U.K. grew 20% during the period to $173.4 mil., compared to a 15% increase in sales overseas. Upjohn Cites Xanax, Halcion And Micronase For 15% Sales Gain From Human Health Segment Merck's first quarter sales increased 7.6% to $921.1 mil. but net earnings advanced at almost three times that pace, climbing 20% to $157.8 mil. Merck President Roy Vagelos, MD, cited a "better product mix, the continuation of cost controls and productivity improvements, as well as the favorable effect of exchange" for the income growth. Vagelos noted that the weakening of the dollar abroad had an "8% favorable effect on first quarter sales." The Merck exec also credited "rapid acceptance in the U.S." of its two first quarter product introductions -- Vasotec and Primaxin. Searle Pharmaceutical's first quarter operating losses at Monsanto totaled $30 mil. The new pharmaceutical subsidiary of Monsanto had first quarter sales of $140 mil. The sales and earnings figures for Searle also include the results from Monsanto's in-house drug business, which has been merged into Searle. That business had sales of $6 mil. in the first quarter of 1985 and an operating loss of $9 mil. In addition, Monsanto noted that it spent $8 mil. on biotechnology product discovery during the first three months of the year. Upjohn first quarter sales of its human health care products and services segment increased 15%, the company reported, led by Xanax, Halcion and Micronase. "Sales of Xanax and Halcion were again at record levels, while sales of Micronase offset the decline in sales of Orinase and Tolinase," Upjohn said. The company added that sales of Motrin "increased primarily because of continued strong performance of the 800 mg dosage form." Overall, Upjohn sales increased 12.8% in the first quarter to $537.4 mil., contributing to a 14.6% gain in earnings from continuing operations to $63 mil. The consolidated sales increase "resulted from a 9% increase in volume and an increase of 5% in selling prices," Upjohn said, "off-set by a 1% decrease from unfavorable foreign currency translation." "Our newer products -- Xanax, Halcion and Micronase -- continue to grow at excellent rates," Upjohn Chairman Ray Parfet noted. He also pointed out that Upjohn's operating income "increased as operating costs and expenses as a percent of sales remained level with a year ago while the company achieved higher quarter sales, largely from those products." Commenting on the impact of currency conversion, Parfet said that "the weak dollar produced a favorable impact on sales in Western Europe and Japan and began to show a positive effect on gross margins late in the quarter as older inventories were depleted." He explained that the losses in Upjohn's "hedging program were incurred because the hedge, net of tax, had become partially ineffective as a result of the precipitous drop in the dollar." Upjohn also reported that it was able to reduce its effective tax rate to 30%, down from 32.2% a year ago. "The lower rate resulted primarily from a greater proportion of total earnings from tax-exempt Puerto Rican operations than a year ago," Upjohn said. ICN reported that first quarter sales for the three month period ending Feb. 28 increased 79.1% to $25.2 mil., contributing to a 52.1% gain in net earnings to just under $2.1 mil. ICN benefitted from the launch of the antiviral Ribavirin by its Viratek subsidiary in January. Viratek earlier reported a nine-fold jump in first quarter sales to $3.4 mil. for the period ending Feb. 28 and net earnings over $2 mil. after reporting a loss for the same period in 1985 ("The Pink Sheet" April 14, p. 9.) Chart omitted.



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