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Executive Summary

Moleculon sales are continuing to climb at a rate of greater than 30% as the firm rides the wave of growth initiated by the start of generic nifedipine marketing by its KaliPharma/Purepac subsidiary in September 1990. Through Dec. 31 and six months of the company's current fiscal year, Moleculon sales jumped to $32.4 mil. (from $24.8 mil. in the like period last year). The company's sales have been distributed evenly between the first two quarters: $15.4 mil. in quarter ending Sept. 30; and $16.9 mil. in the Dec. 31 period. Moleculon's earnings are accelerating at a faster pace: up over 230% to $1.9 mil. in the first quarter and over 160% to $2.9 mil. in the second quarter. The company is carrying an eye- catching 15% net-to-sales profit margin through the first half. Moleculon, a majority-owned subsidiary of the Australian firm Faulding, attributes the "favorable results" to the "continued improvement in the profitability of all core products including nifedipine." Purepac has competed in the generic market with Chase from the first introductions of the generic versions in the late summer of 1990. R. P. Scherer also had an ANDA approved for nifedipine standard release 10 mg caps in October 1991. The Moleculon growth highlights a series of strong sales performances by publicly owned generic firms reporting interim results during the first weeks of February. In addition to Moleculon, good sales results were reported by Pharmaceutical Resources (up 42% in the first quarter), Barr (up 34% for six months), and Biocraft (16% in the third quarter). The generic sales figures combine with the recent reports of increasing numbers of ANDA approvals from FDA to indicate that the generics business may finally be emerging from the turmoil of the recent years of investigations, disruptions and convictions. Pharmaceutical Resources (Par Pharmaceutical) showed its third quarterly sales gain in a row after seven consecutive declining quarters. Pharmaceutical Resources reported sales of $11.5 mil. in the first quarter of fiscal 1992 ended Dec. 31, compared to $8.1 mil. from continuing operations in the same period of fiscal 1991. "We are gratified that last quarter's financial performance reflects our customers' confidence in our products and in our commitment to corporate integrity," Pharmaceutical Resources President Kenneth Sawyer said. Noting that the company is showing a profit ($673,000) for the first time in nine quarters, Sawyer said that "these earnings indicate that the marketplace is aware of and accepting our efforts" to reestablish Par "as a premier supplier of generic medicines." Pharmaceutical Resources' profits include $250,000 from an extra-ordinary tax credit. Barr's 34% sales increase carried the firm to sales of just short of $60 mil. in the first half of its fiscal year. Barr's net earnings, however, are being held back by its court battle with Copley over the development of a sustained-release erythromycin and by its continuing disputes with FDA. A $4 mil. award to Copley in November from the breach of contract suit cut $1.6 mil. off Barr's net earnings in the second quarter. Barr says that it is appealing the decision. Barr also reports that "regulatory and compliance expenses" took another $1.4 mil. off earnings. As an outgrowth of a late September inspection of the firm, FDA threatened to seek to close down the company's facilities at two sites ("The Pink Sheet" Nov. 11, p. 15). Barr says that "discussions with the FDA continue and the company hopes it can resolve all remaining points without litigation." Biocraft sales growth accelerated to 16% in the third quarter after a 9% advance in the second period and an 11% drop at the start of the year. Through nine months, the company shows total sales of $70.7 mil. compared to $66.1 mil. a year before. The company shows a loss of $3 mil. through the nine months, however.

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