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Executive Summary

Walgreens reported the opening of 42 new retail outlets during the six months ended Feb. 29 and the remodeling of 26 others. "We're currently installing point-of-sale scanning in our drug stores in Fort Wayne, Indiana, with encouraging results," Chairman Charles Walgreen added. "Our largest market -- Chicago -- will begin to roll out scanning this summer." The chain said that sales for the first half of fiscal 1988 increased 16% to $ 2.5 bil. Net earnings, helped by a lower tax rate, advanced 28% to $ 66.3 mil. second quarter sales. Volume for the three month period ended Feb. 29 increased 15% to $ 1.4 bil., while the chain's bottom line jumped 23% to $ 47.5 mil. Walgreens reported "impressive gains" in prescription sales, which rose 26% in both the three and six-month period. Drugstore division sales, which account for about 97% of corporate volume, were up 15% for the quarter and 16% for the first half. The chain also indicated a more aggressive pricing policy. "We're confronting gross margin pressures -- caused by tough competition, expanded advertising and increased third party business -- with added emphasis on reducing shrink and maintaining fair pricing levels," President Fred Canning remarked. "And our efforts at controlling inventories are having a positive effect on earnings." Upjohn reported that "record" sales of Xanax and Halcion paced an 11% increase in worldwide human health care sales during the first quarter of 1988. "Both domestic and foreign central nervous system [product] sales were strong in unit and dollar volume, with U.S. sales benefiting from purchases made prior to an April price increase," the company said, adding that its antidiabetic agent (ITALICS)Micronase "continued excellent sales growth." However, the company noted that sales of the antibiotic Cleocin and the NSAID Motrin "declined significantly in the U.S." due to increased generic competition. Upjohn HealthCare Services revenues also declined. Upjohn's worldwide volume for the first three months of the year increased 11% to $ 662 mil., the firm reported. U.S. sales were $ 398 mil., an increase of 7%, while foreign sales jumped 18% to $ 264 mil. "The consolidated sales increase resulted from a 6% increase in volume, a 1% increase in price, and a 4% increase from foreign currency fluctuations," Upjohn explained. The firm's net income jumped 17%, from $ 81 mil. in the first quarter of 1987 to $ 95 mil. Operating income was up 18% during the 13 weeks to $ 138 mil., and made up 21% of sales. Contributing to its bottom line, Upjohn noted, were the strong performances by the animal health and agricultural units, particularly outside the U.S. Abbott reported that sales of pharmaceutical and nutritional products approached $ 650 mil. in the first quarter of 1988. "Sales of pharmaceutical and nutritional products were $ 637 mil. in the first quarter, a 16.2% increase from the $ 548 mil. in the first quarter of 1987," Abbott said. Including hospital and laboratory businesses, which grew 21% to $ 551 mil., Abbott's overall corporate volume was up 18.4% to $ 1.2 bil. Net earnings were also up sharply during the three months -- 21.5% to $ 172 mil., from $ 142 mil. in the comparable 1987 period. "The company's improved earnings were primarily the result of outstanding productivity, increased demand for Abbott's line of cost-effective products, the weaker U.S. dollar, and a lower U.S. income tax rate," Abbott Chairman Robert Schoellhorn commented. The company's tax rate was more than three percentage points lower in the first quarter of 1988 -- 29.25% versus 32.5% in 1987. International sales, reflecting "good unit growth and the impact of a weaker U.S. dollar," increased almost 30%, from $ 316 mil. in the first three months of 1987 to $ 410 mil. Domestic sales, while making up nearly two-thirds of Abbott's total sales, increased at roughly half that rate, growing 13.2% to $ 778 mil. The company noted that quarterly R&D expenditures surpassed $ 100 mil., rising 31% to $ 103 mil. Also reporting first quarter results, ICN Pharmaceuticals said that sales increased 55% to almost $ 35 mil., reflecting "continued widespread acceptance of its pharmaceutical and biomedical product lines worldwide and acquisitions made during 1987." However, ICN reported that net earnings declined 62% for the quarter (ended Feb. 29), from $ 6.7 mil. to $ 2.5 mil. "Net income for the quarter benefited from the reversal of $ 15.6 mil. of unrealized loss before income taxes in [our] investment portfolio at the end of November 1987," ICN commented. "The gain was partially offset by higher interest expense, increased investments in R&D, a larger domestic pharmaceutical sales force, additional goodwill, amortization and lower margins due to product mix." On March 24, the company announced the sale of its 8.6% interest in Roche. ICN subsidiary, SPI Pharmaceuticals, reported that sales of the anti-psoriasis agent Oxsoralen Ultra spurred a 28% increase in the company's ethical dermatological line during the quarter. Overall, SPI's sales increased 81% to $ 24 mil. while net income fell 61% to $ 1.4 mil. Chart omitted.

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