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SCHERING-PLOUGH U.S. SALES UP 5%: MERCK MEVACOR SALES "VIRTUALLY FLAT"; MCKESSON PROFITS STRONGER AS WHOLESALER ADJUSTS TO LOWER Rx DRUG INFLATION

Executive Summary

Schering-Plough's domestic prescription pharmaceutical sales increased 5% in the first quarter of 1993, the company reported April 23. "Higher sales" for Nitro-Dur, K-Dur, Eulexin and Intron A contributed to the growth. "Sales were lower for the Proventil line of asthma products primarily as a result of increased generic competition," Schering noted. "Average U.S. net prescription price increases were held to 2% -- below the increase in the Consumer Price Index -- in both 1991 and 1992," Schering-Plough said. "In 1993, the average price increase again is expected to be below the CPI." Pharmaceutical sales outside the U.S. "were particularly strong" in the quarter, Schering-Plough said, up 17% as reported, and up 23% excluding currency fluctuations. Worldwide pharmaceutical sales increased 10%, with currency effects deducting two percentage points. Corporate sales were 7% higher (9% excluding currency) at $1.09 bil., Schering-Plough reported. Income prior to taking an accounting charge was $223.5 mil., up 15.9%. The accounting charges reduced reported earnings by $94.2 mil. Sales of SmithKline Beecham's broad spectrum antibiotic Augmentin climbed 22%, to $316 mil., in the first quarter. The continued growth in Augmentin sales contributed to SB's overall sales increase of 15% to $1.32 bil. for the first three months of 1993. Profit was up 12% led by U.S. sales, which grew 25%, the company reported. SB's strong first quarter sales performance was primarily due to new product introductions, the company said. New product sales in the quarter totaled $142 mil., compared to $371 mil. for all of 1992. The most recent addition to SB's product line, the antidepressant Paxil/Seroxat, has been accepted for use by 70% of all U.S. managed care organizations, SB said. The arthritis drug Relafen is second among branded NSAIDs in the U.S. market, capturing 8.3% of new prescriptions since its introduction in the second quarter of 1992, the company reported. Merck reported a first quarter rough spot; sales of Mevacor "were virtually flat." The company attributed the result to "government cost control actions around the world, strong competition in the United States and the slowing growth in the cholesterol-lowering market, particularly" in the U.S. The firm's newer cholesterol-lowerer, Zocor, "continued to have strong sales growth," Merck said. Overall, Merck reported first-quarter sales of $2.4 bil., a 7% gain over the first quarter of 1992. Net income increased 10% to $613.8 mil. for the quarter. McKesson Drug sales for the year ended March 31 were $8.9 bil., up 12%, McKesson Corp. reported. Fourth quarter sales were up more slowly, 6% to $2.3 bil. "The slower rate of sales growth in the quarter reflects the lower rate of pharmaceutical price inflation, competitive factors and the company's continuing emphasis on credit-worthy customers and business that generates a satisfactory return on investment," McKesson said. Despite the slower sales level for the fourth quarter, profitability of the drug wholesaling operations was cited by the company as a strong contributor for the period. "Improved inventory management and stable selling margins in drug wholesaling contributed significantly" to an 18% increase in fourth-quarter operating profits for McKesson's health care services segment, the wholesaler noted. McKesson cited "the progress we made last year in adapting to the reduced rate of inflation in pharmaceutical prices" as contributing to profitability for the year. "These measures include improved inventory management, the continuing reconfiguration of the company's distribution network which resulted in reducing, by five, to 40, the number of facilities last year and a series of other profit-improvement programs that more than offset the impact of lower pharmaceutical price inflation," McKesson said. The health care services segment (including wholesaling and the PCS drug benefit management organization) posted operating profits of $61.1 mil. for the quarter and $222.8 mil. for the year.
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