SMITHKLINE BEECHAM DYAZIDE, AUGMENTIN AND TIMENTIN PACE 23% Rx FIRST QUARTER SALES GAIN TO $1.06 BIL.; DYAZIDE’s REVENUES JUMP 67% IN THE U.S.

Sales gains by Dyazide in the U.S. and "strong, worldwide growth" of the antibiotics Augmentin and Timentin boosted SmithKline Beecham pharmaceutical revenues 22.7% in the first quarter to $1.06 bil., the company reported May 9. Trading profits from pharmaceuticals increased 39.2% to $298 mil.

Dyazide sales jumped 67% in the U.S. The significant increase in sales reflects SmithKline Beecham's "dividend" from the generic scandal: the only two generic versions of Dyazide were pulled off the market last year after evidence surfaced that the bioequivalance data for the two products had been falsified.

Sales of the penicillin-resistant infection antibiotics Augmentin and Timentin rose 54% and 42% worldwide, respectively. Both drugs are being co-promoted by SB's combined sales force of 6,000. SmithKline Beecham Chairman Henry Wendt highlighted Augmentin's performance at an Alex. Brown-sponsored health care conference May 8 as an example of what co-promotion by the company's combined sales force can accomplish. Wendt noted that since Augmentin co-promotion began in September 1989, the product's share of the global antibiotic market has increased by "almost two percentage points."

Citing new prescription data for the seven-month period from September through March, Wendt said the $500 mil.-plus a year drug showed a 19% increase in March prescriptions, and had climbed from a 6.9% share of the market to an 8.5% share. The co-promotion effort generated a 33% sales gain for Augmentin in the fourth quarter of 1989, he reported.

Sales of the vaccine Engerix-B also contributed to the first quarter pharmaceuticals sales gain. The company reported May 9 that Engerix-B sales grew by "more than 100% worldwide." SmithKline Beecham told analysts in April that sales for the recombinant vaccine for hepatitis B "approached" $100 mil. in 1989. Engerix-B, which was launched in the U.S. last year, is available in 90 countries.

Tagamet sales continued to slide, down 3% in the quarter, the company reported. SB cited "trade destocking" in Japan due to government-mandated price reductions and a 3% decline in U.S. sales for the decline. Wendt predicted that Tagamet will account for "less than 10%" of sales by 1994 when the U.S. patent expires.

SmithKline Beechman consolidated revenues rose 18.9% to $1.91 bil. on a continuing basis and trading profits from continuing operations were ahead 24.9% to $406 mil. Pre-tax profits were down 7% to $361 mil., reflecting an $84 mil. increase in interest expense from the merger.

Consumer brands sales gained 13.1% to $500 mil. in the first quarter. "Significantly increased advertising and marketing expenditures" were phased in during the quarter, especially in the U.S., SmithKline Beecham noted. Early sales indications from new and campaigns for Oxy acne medication and Aquafresh toothpaste are "encouraging," the company said.

In the May 9 press release on the financial results, Wendt predicted that the company will meet its debt equity targets by the end of the year, as SmithKline Beecham generates a "high level of cash" from operations and continues its debt reduction campaign, which includes divestitures and restructuring.

On March 30, SmithKline Beecham completed the previously announced sale of the Ambrosia, Marmite and Bovril brands for$257 mil. Since the close of the quarter, the company has made deals to sell its 32 small OTC brands for $53 mil. and the U.K.-based Yardley/Lentheric operations for $182 mil.

In January, SB divested the North American household products unit for $106 mil. and its UHU adhesives business for $150 mil. Proceeds were not disclosed for two 1989 divestitures -- the Bovril Canada and Horlicks Farms & Dairies businesses.

Also reporting first quarter financials, Halsey Drug posted a quarterly sales gain of 6.4% to $5.7 mil.; however, earnings plunged 66% to $165,000 compared to $486,000 in the same period a year ago. Halsey President and CEO Jay Marcus said the results reflected "continuing slowness" in FDA's ANDA approvals "coupled with increased costs and expenses associated with the expansion of the company's manufacturing facilities." He credited the company's improved facility with generating new business from three wholesale drug customers.

While Halsey's troubles with the generic approval slowdown reflect an industrywide problem, Par Pharmaceutical provides an example of the bottom-line impact from being directly involved in the scandal.

Spring Valley, N.Y.-based Par reported a 54% drop in second quarter (ended April 1) sales to $13.7 mil. and a net loss of$5.2 mil. Par's poor second quarter performance follows on the heels of a 33.9% drop in first quarter revenues to $18.5 mil. and a loss of $440,000. For the six-months, Par sales dropped 44.4% to $32.3 mil. from $58.1 mil. in the comparable period of FY 1989. For the first half of the current year, the company is reporting a net loss of $5.6 mil.

Results were "severely impacted" by the Class III recall by Par subsidiary Quad in March. The recall, which initially covered 22 injectables, was expanded to 25 injectable products, Par indicated on May 18. The recall followed by a week a halt in distribution of 27 Quad products as a result of internal and external audits of the firm's ANDAs that discovered manufacturing changes made without proper FDA authorization.

Par initially predicted that the recall would lead to a $4 mil. charge to earnings. However, the company reported that it recorded a $5.7 mil. charge to earnings attributed to the recalls and "related matters." Quad products involved in the recall (about 85% of its product line) may begin to be reintroduced "within the next few weeks," Par predicted. Par is still feeling the "after-effects" from the company's voluntary suspension of shipments last August for all of its approximately 150 solid dosage products. As of March 31, Par noted, oral solid products that "historically accounted for approximately 65%" of its oral solid sales had been reintroduced; "however," Par noted, their sales "are below last year's levels because of the time involved in certain review procedures, as well as a reduced customer base."