MMD’s CARDIZEM SALES CLIMB 23% IN QUARTER AS GENERIC COMPETITION LOOMS; SELDANE SALES DECLINE AFTER RELABELING; FOXMEYER QUARTERLY SALES TOP $1 BIL.
Marion Merrell Dow's Cardizem (diltiazem) line sales grew 23% to $282 mil. in the July-September period, the last full quarter before MMD's immediate-release diltiazem exclusivity expires on Nov. 5. Nearly 30% of Cardizem sales in the quarter were generated by MMD's newest line extension, the Elan-developed once-a-day formulation Cardizem CD. Sales of Cardizem CD were $80 mil. in the quarter, up from $47 mil. in the second quarter. MMD launched Cardizem CD for treatment of hypertension in December; on Oct. 15, the product was granted an additional indication for angina. Immediate-release diltiazem is approved only for angina. MMD also markets a twice-daily diltiazem, Cardizem SR, for treatment of hypertension. In addition to switching patients to still-patented formulations of diltiazem, Marion Merrell Dow has begun shipping to Rugby an authorized generic version manufactured by a subsidiary, Blue Ridge Labs. Outside competition from Mylan, Copley and Lederle begins Nov. 5 when tentatively-approved ANDAs for diltiazem become effective. With sales of $746 mil. (up 18%) through the first three quarters of 1992, the Cardizem line reclaimed the top spot among MMD's product lines. The Seldane family, with $501 mil. in first- half sales, had passed Cardizem in July. However, Seldane third quarter sales were hurt by a July relabeling to warn of drug interactions with erythromycin and two antifungals. After 31% sales growth in the first six months of the year, Seldane sales dropped 7% in the third quarter to $199 mil. Through nine months, Seldane sales are $700 mil., up 17%. The July relabeling involved another antihistamine, Johnson & Johnson's Hismanal. J&J reported to analysts on Oct. 20 that Hismanal sales also declined in the third quarter (see following story). MMD reported that sales of the Nicoderm nicotine transdermal patch in the third quarter were $58 mil., down from $82 mil. in the second quarter; supply shortages led to a promotional hiatus during the summer. Since its launch in December, Nicoderm has generated sales of $195 mil. In the third quarter the shortages were ended and the company resumed promotional efforts, MMD noted. Sales of Nicorette prescription nicotine chewing gum were $13 mil. in the third quarter, down from $29 mil. in the comparable period of 1991. The anti-ulcer drug Carafate (sucralfate) was "aided by wholesale buying patterns" and posted a 17% sales increase to $61 mil. in the quarter. For the nine months, Carafate sales are $150 mil., up 2%. Carafate drew a warning letter from FDA on Oct. 13 for its comparative superiority claims for duodenal ulcer patients who smoke. FDA wants a corrective campaign initiated and current ads and promotions halted (see related story, p. 8). MMD corporate sales rose 17% for the quarter to $838 mil. Earnings increased 15% to $178 mil. For the nine months, sales are up 21% to $2.5 bil. while earnings grew 20% to $549 mil. Marion Merrell Dow's results continue to run counter to the pharmaceutical industry's 1992 pattern of sharper earnings than sales growth. For the third consecutive quarter, many of the larger drug companies appear to be using operating efficiencies to keep the bottom line growing faster than sales. Among companies fitting the pattern are Warner-Lambert (sales up 13.6%, net income up 14.4%), American Cyanamid (sales up 7.1%, earnings up 8.2%), Johnson & Johnson (sales up 11.6%, earnings up 17.1%) and SmithKline Beecham (sales up 9.1%, income up 12.5%). One major firm went to the opposite extreme: Lilly aggressively increased expenses and took a charge of over half a billion dollars, reporting a loss of $268.5 mil. for the third quarter -- the company's first recorded loss in 51 years. Lilly posted 10% sales growth for the three-month period, to $1.48 bil., on the strength of a 15% increase in worldwide pharmaceutical sales. However, the company's "aggressive steps taken in recent months to build its core businesses" adversely affected earnings, Lilly said. The company reported a 31% increase in cost of sales, a 48.7% increase in R&D spending and a 34.2% increase in marketing and administrative expenses (including spending to support the launch of the antibiotic Lorabid in the U.S.). Despite the increased operating expenses, Lilly's operating profit would have been $134 mil. (compared to $425 mil. in the 1991 third quarter) except for a $519.6 mil. charge for "restructuring and special charges." The increased expenses and charges reflect "the impact of strategic business actions approved by the board of directors," Lilly said, and "are primarily of a nonrecurring nature." Specific extraordinary costs cited by the company include "a redefinition of site missions and a streamlining of several manufacturing operations" resulting in a $245 mil. write-down. Lilly will consolidate all of its bulk antibiotic manufacturing in two sites: Clinton, Ind. and Kinsale, Ireland. The firm's Lafayette, Ind. site will be devoted to "flexible" production for clinical trials. Other charges include a review of the company's medical device businesses resulting in a charge of $180 mil. "primarily related to the write-down of certain intangible assets and charges associated with responding to regulatory initiatives, including actions to strengthen the subsidiaries' good manufacturing practices and procedures" and $295 mil. in "other charges," which include "expenses recognized as a result of recently-announced strategic alliances with Centocor and Oclassen Pharmaceuticals." Nine-month sales for Lilly rose 9% to $4.51 bil. Net income was $397.5 mil., a 60.4% decline from the same period in 1991. FoxMeyer's fiscal second quarter sales topped $1 bil. thanks in part to the May acquisition of Harris Wholesale. Quarterly sales totaled $1.1 bil., up 49.9%. FoxMeyer's internal sales growth was 21%, the wholesaler/distributor noted. "The remainder of new sales were generated by Harris Wholesale...and FoxMeyer's new warehouse near Minneapolis, which was acquired from Snyder Drug Stores in mid-September," FoxMeyer CEO Robert King commented. Also spurring sales growth are "three major new accounts that we have added since July," King said. For the six months, sales were up 37.2% to $2.04 bil. Net income for the quarter was $6 mil., 41.3% higher than in the comparable period a year ago. For the six months, earnings were $12.4 mil., up 30.4%. FoxMeyer still faces uncertainty regarding its largest customer, Phar-Mor. The deep discount drug chain recently sought bankruptcy protection following the allegation that two of its top officers had embezzled from the company. "We are shipping on a cash basis to Phar-Mor and volume has held up well," King said. "At this time we have not taken a write- off. We are evaluating the proposed debtor-in-possession financing agreements and Phar-Mor's business plan for the next one to two years, including the pending completion of the Phar-Mor audit," he said. "We are discussing with Phar-Mor our continuing supply relationship and anticipate that, as we work toward a conclusion, FoxMeyer will be better able to evaluate any possible write-off." Phar-Mor's $150 mil. debtor-in-possession financing proposal was approved by an Ohio federal bankruptcy court Oct. 22. The wholesaler noted that earnings-per-share comparisons between 1992 and 1991 are affected by a 34.6% increase in the average number of shares outstanding. FoxMeyer majority-owner National Intergroup announced Oct. 16 that it plans to boost its interest in FoxMeyer from 70.5% to 80.5% via a tender offer for 3.3 mil. FoxMeyer shares. Mylan has begun reaping the rewards of its 1992 ANDA approval run. Net sales jumped 68% for the generic drug firm's fiscal second quarter to $51 mil. For the six months, sales are up 54.3% to $89.9 mil. Mylan earnings shot up 93.3% for the quarter to $16.7 mil. and 60.1% to $28.1 mil. fiscal year-to-date. Those results exclude revenues from the firm's Somerset joint venture with Bolar. Mylan's share of Somerset sales was $12.8 mil. for the quarter and $22.5 mil. for the six months.
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