UNIVERSAL DRUG COVERAGE WOULD INCREASE PHARMACEUTICAL VOLUME 3%-5%, WARNER-LAMBERT ESTIMATES; SALES RISE 2% IN QUARTER BUT U.S. Rx DRUG SALES DROP 12%
Universal drug coverage in the U.S. could increase pharmaceutical volume by 3%-5%, Warner-Lambert President Lodewijk de Vink told a securities analysts meeting April 21. De Vink chose the analysts forum to counter the notion that expanding Medicare coverage to oupatient prescription drugs would be a great boon to the pharmaceutical industry by increasing volume. "There could be some expansion of the U.S. drug market... because a drug benefit would likely be created for Medicare recipients, as well as for the millions of uninsured," de Vink acknowledged. However, he added, "we believe that the number of new patients will be far fewer than the 72 mil. figure that some quote." He predicted that the "increase in pharmaceutical volume will more likely be in the three to five percent range." The Pharmaceutical Manufacturers Association has used the 72 mil. figure to quantify the extent of the new market for pharmaceuticals if full third-party coverage is enacted ("The Pink Sheet" March 29, p. 3). Warner-Lambert corporate sales grew 2% to $1.33 bil. in the first quarter, up from $1.31 bil. for the same quarter in 1992, the company reported April 19. The company credited consumer products for the sales growth, as prescription pharmaceutical sales fell 12% in the U.S. and by 1% outside the U.S. Accounting for currency fluctuations, international pharmaceutical sales rose 4%. Corporate sales grew 4% in constant currency rates, Warner-Lambert said. Net income for the most recent quarter was ahead 11% to $182 mil. from $164 mil. the first quarter of 1992. Warner-Lambert blamed "the impact of new pharmaceutical regulations in Germany" and the company's regulatory problems at its Puerto Rico facilities for the decline in pharmaceutical sales. Problems such as inadequate record-keeping and product contamination were uncovered at Warner-Lambert's two Puerto Rico facilities as a result of repeated FDA inspections in 1991 and 1992 ("The Pink Sheet" Dec. 14, 1992, p. 12). Warner-Lambert Chairman Melvin Goodes said "the area of magnitude" of correcting regulatory problems in Puerto Rico and the loss of sales from products produced on the island is "going to be $20 to $25 mil. dollars" in the first quarter. Goodes indicated that he expects the cost of bringing the Puerto Rico facilities into compliance to taper off toward the end of the year, saying, "I will be very disappointed if it is as large as that in upcoming quarters." De Vink told the analysts that W-L hopes to resolve the problems in Puerto Rico "hopefully by later this year." Actions being taken by the company, de Vink said, include the formation of "a task force that reports directly to me" and the production of a "detailed document that responded to each of the FDA observations and presented a precise action plan and timetable as to when each of the items would be addressed."
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