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SPI PHARMS' U.S. DERMATOLOGY BUSINESS HELPS DOUBLE 1991 EARNINGS, TO $30.1 MIL.

Executive Summary

SPI Pharmaceuticals' U.S. prescription dermatological business increased 22% in 1991, helping to propel revenues to more than twice year-earlier levels, the firm reported March 16. For the calendar year, SPI sales climbed 158.9% to $364.4 mil. SPI's bottom line kept pace with sales, advancing 101.9% to $30.1 mil. Both sales and income reflect a new Central European joint venture, ICN/Galenika, that began operations in May 1991 ("The Pink Sheet" May 6, 1991, T&G-10), SPI said. The firm also noted "strong sales gains in antibiotics in Yugoslavia." Because SPI only recently switched to a calendar year for accounting purposes, fourth quarter results are not yet available, the firm added. As reported earlier, Chiron's one-time charge to earnings for the acquisition of Cetus in the fourth quarter 1991 resulted in a large loss for the year, $425.2 mil. on sales of $118.5 mil., up 50.9%. The one-time charge was $426 mil. Net loss for the fourth quarter was $434.6 mil., on sales of $36.3 mil., ahead 32.1%. Sales growth is being driven by Chiron's joint venture with Ortho Diagnostic for blood screening and diagnostics, contributing $16. mil. to fourth quarter profits, Chrion said. In other areas of its business, Chiron noted that its vaccine joint venture partner Ciba-Geigy has "agreed to invest, at Chiron's request, up to $45 mil. in excess of its 50% obligation to fund activities of The Biocine Co. over the next four years, beginning in 1992." In return, Ciba-Geigy will get a preferred interest in Biocine earnings, which Chiron has an option to repurchase. Bergen-Brunswig said that second quarter gross profit margins declined due to "a decrease in forward buying opportunities and increases in revenue coming from the hospital segment, where margins are slightly lower" than with chains and independent pharmacies. For the three months, revenues from continuing operations gained 16.5% to $1.2 bil. Net was flat at $15.5 mil. Earnings from discontinued operations (Commtron video rental/consumer electronics) were $1.5 mil., Bergen added. The company recently announced that it has signed a definitive agreement to sell Commtron to a subsidiary of Ingram Industries so as to focus solely on drug distribution. On March 18, Bergen announced that Chairman Emil Martini died March 16 at age 64 after a long illness. Martini joined Bergen Drug Company, a regional wholesaler founded by his father, in 1952. Assuming control of the business after his father's death, Martini negotiated the acquisition of Brunswig Drug in 1969 and moved the company into national distribution of pharmaceuticals and other products. Martini was a past president of the National Wholesale Druggists Association, among many other industry activities. Wholesaler Krelitz Industries said that "sales increases from existing and new customers in the drug distribution business of approximately $23.9 mil. did not fully mitigate the previously reported loss of a significant customer." Sales for the three months ended January were $63.4 mil., off 6.8%. Krelitz had a net loss of $111,000, attributed to "lower gross profit margins and increased operating expenses as compared to last year."

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