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MARION MERRELL DOW’s SELDANE FAMILY IS FIRM’s TOP LINE: SALES TOP $500 MIL. IN FIRST HALF; DRUG FIRMS CONTINUE TO SHOW BETTER EARNINGS THAN SALES GROWTH

Executive Summary

Marion Merrell Dow's Seldane (terfenadine) line, on the strength of a 33% second quarter sales increase, has passed the Cardizem (diltiazem) family in sales volume through six months and is now MMD's number one product line. Sales of the nonsedating antihistamine Seldane and the terfenadine/pseudoephedrine combination Seldane D reached $296 mil. in the second quarter of 1992 and totaled $501 mil. for the first half, an increase of 31% from the comparable period of 1991, the company reported. Seldane D, launched in August 1991, posted $59 mil. in second-quarter sales and a total of $87 mil. through the six months. Total Cardizem family sales, including the original immediate- release formulation, the twice-daily Cardizem SR and once-daily Cardizem CD, increased 12% in the second quarter to $231 mil. Through six months, the Cardizem family has posted sales of $464 mil., up 15% over last year. Cardizem CD, launched in December, racked up $47 mil. in second quarter sales. Sales of the nicotine patch Nicoderm were $82 mil. for the quarter and $137 mil. through six months. "Supply is catching up with demand, and the company expects to renew promotional efforts in the near future," MMD said. Marion Merrell Dow net sales for the quarter rose 26% to $906 mil. Through six months, sales have climbed 24% to $1.69 bil. Earnings rose 24% for the three months to $201 mil. and 23% for the first six months to $371 mil. MMD's Nicoderm partner Alza reported 70% revenue growth for the quarter based, in part, on the strength of the smoking cessation product. Total revenues were $63.9 mil. compared to $37.5 mil. a year ago. Royalties and fees were up 86.4% to $27.4 mil. "primarily due to" Nicoderm royalties and increased royalties on sales of Pfizer's Procardia XL sustained-release nifedipine, Alza said. Through six months, Alza's revenues climbed 71.4% to $118.6 mil. Earnings were up 92.1% for the quarter to $16.8 mil. and more than doubled to $32.9 mil. for the six months. Several of the drug company majors continued their first- quarter pattern of earnings growth outpacing sales as the firms turn to operating efficiencies to counter decreasing price flexibility and changing wholesaler buying patterns. Merck, Pfizer, Rhone-Poulence Rorer, SmithKline Beecham and Warner- Lambert all reported sharper increases in earnings than in sales. RPR's sales for the quarter climbed 5% to $971.1 mil. (6% without currency fluctuations). Through six months, sales were up less than 1% to $1.87 bil. Earnings, however, leapt briskly, up 27% for the quarter to $87 mil. and 32% to $161 mil. through six months. The Franco-American company attributed earnings growth to "gross margin improvement, decline in interest cost and a lower tax rate." The firm noted that "continued cost control in selling, delivery and administration" also contributed. RPR stated that "sales trends in the U.S. were affected by trade buying patterns during the second quarter." Nevertheless, the company added, "strong demand continued" for the inhaled corticosteroid Azmacort, the anti-diuretic DDAVP, the calcitonin product Calcimar and the antihypertensive Lozol. The nasal corticosteroid Nasacort "continues to show excellent market acceptance following its August 1991 introduction," RPR said. The firm's own once-a-day diltiazem, Dilacor XR, was launched at the end of the quarter. "Trade buying patterns" also were cited, in part, for a second quarter sales decline for RPR's OTC antacid Maalox. The firm added that "the high level of competitive promotional spending" also hurt Maalox. SmithKline Beecham reported that Tums now holds a 42.7% share of the U.S. antacid market. Worldwide Tums sales increased 25% for the quarter. Total consumer brands sales were up 7% to $671 mil. for the quarter and 6% to $1.28 bil. for the half year, SB said. SmithKline Beecham's prescription drug business grew 13% to $1.3 bil. for the quarter, the company said. Through six months, the pharmaceutical segment is up 11% to $2.57 bil. (16% at comparable rates of exchange). Among products spurring growth were the nonsteroidal anti-inflammatory drug Relafen, with sales of over $75 mil. through six months, and the hepatitis B vaccine Energix-B. SB is apparently seeking to protect market share of two of its important older brands in the U.S. -- the anti-ulcer agent Tagamet and the antihypertensive Dyazide -- through an agreement which it reportedly has with Medco Containment to include them as preferred drugs in its "Prescriber's Choice" program. Pfizer's pharmaceutical sales, spurred by new products including the antibiotic Zithromax and the antidepressant Zoloft, posted a 17% increase in the second quarter. "Almost all" of the sales growth "was from volume," Pfizer said. "No U.S. pharmaceutical prices were increased during the quarter." The March-through-June period was a strong one for three wholesalers: Cardinal and Fox-Meyer each reported over 30% sales gains and over 20% earnings gains for their fiscal year first quarters. McKesson reported a 26.6% sales gain to $2.84 bil. for its first quarter. Earnings were up 8.7% to $27.5 mil. Durr-Fillauer, currently involved in a bidding war between Cardinal and Bergen Brunswig, posted a 12% sales gain to $261 mil. for the second quarter. Earnings, however, plunged 27.2% to $4 mil. Through six months, Durr sales are up 14.9% to $523 mil.; earnings are off 17.2% to $7.9 mil.

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