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PHARMACEUTICAL RESOURCES FINISHES FY 1992 WITH 53% SALES INCREASE; BARR SALES PLUNGE 41% IN FISCAL FIRST QUARTER AS FIRM AWAITS COURT DECISION IN FDA CASE

Executive Summary

Pharmaceutical Resources, Inc. is crediting a "successful rebuilding" of its Par oral solid dosage generic drug products subsidiary with a 53% increase in sales for fiscal 1992 (ended Oct. 3). The company's sales totaled $52.5 mil. for the year, compared to $34.2 mil. in FY 1991. Fourth quarter revenues for PRI were up 48% to $14.8 mil. Net income for the year totaled $7.9 mil., comprising $4.1 mil. from continuing operations, $1.7 mil. from discontinued operations and an extraordinary tax credit of $2.2 mil. PRI discontinued its Quad generic injectable business last year and sold the remaining assets to the Liposome company in July. Par posted a net loss of $29 mil. in its fiscal 1991 fourth quarter, due in part to the discontinuation of Quad and to charges for legal settlements. PRI anticipates additional "significant sales increases" in the current quarter ending Jan. 2 as a result of the company's recently-announced exclusive distribution agreement with the Canadian generic manufacturer Genpharm ("The Pink Sheet" Nov. 16, In Brief). Profit margins for Genpharm manufactured products, including generic versions of Pfizer's Feldene (piroxicam) and Sandoz' Visken (pindolol) will probably be lower, however, than the gross margins for products produced by PRI, the firm noted. Barr Labs' continuing regulatory imbroglio led to a 41% decrease in sales for the generic firm's fiscal first quarter (ended Sept. 30). First quarter sales were $17.1 mil., down from $29 mil. in the first quarter of fiscal 1992. Net earnings tumbled more than 90% to $81,000. Barr noted that "its continued voluntary suspension of certain products...has resulted in the 41% decrease in net sales." In addition, Barr "incurred significant legal expenditures during the quarter" in contesting FDA compliance policies in Newark federal court. A decision from the judge is expected soon ("The Pink Sheet" Oct. 19, T&G-12). Barr "remains out of compliance with certain covenants of its senior and convertible notes," the firm said. "The company remains hopeful that a modification or waiver of these covenants will be obtained from its noteholders." Marsam "is actively bidding for hospital contracts" as it begins to develop its own distribution operation in the wake of its breakup with former joint venture partner Geneva. The injectable generics firm "is in the process of recruiting an experienced sales and marketing team." Marsam warned that losses may be incurred during the transition period, which it expects to last until "some time during 1993" when "significant deliveries" under hospital contracts could begin. Geneva and Marsam are in litigation over the breakup. For the third quarter, Marsam revenues declined 9% to $4.4 mil. and the company posted a loss of $136,000. For the nine months, sales are up 30.8% to $14.9 mil. but earnings have dropped 32.9% to $339,000.
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