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SMITHKLINE BEECHAM WORLDWIDE OTC SALES GROW 13% IN THIRD QUARTER

This article was originally published in The Tan Sheet

Executive Summary

SMITHKLINE BEECHAM WORLDWIDE OTC SALES GROW 13% IN THIRD QUARTER, boosted by U.S. sales of the Tums antacid line, which claimed "a new high market share of 46.8%" in its category, the company announced Oct. 19. Sales of all SmithKline Consumer Brands products for the three-month period ended Sept. 30 grew 24% to $ 517 mil. (based on a translation rate of (BRITISH POUND)1 = $ 1.51). SmithKline attributed the sales growth from Consumer Brands to the division's "strategic refocusing on over-the-counter medicines, oral care products, and health-related drinks." Sales of SB's health-related drinks, which are sold in Europe, increased 6% in the quarter, while oral care sales advanced 16%, "with especially strong gains in the U.K. and Germany," the company said. Third-quarter corporate sales totaled $ 2.23 bil. in the third quarter, down 1.9%. Sales from continuing operations rose 6%, according to the company. SmithKline noted that "results for the third quarter include exceptional items relating to the sale of the personal care brands and subsequent fundamental restructuring of the company's Consumer Brands business". Unadjusted nine month sales climbed 2% to $ 6.8 bil., while adjusted sales grew 25%, SmithKline Beecham reported. Net earnings for the three-month period declined 8.5% to $ 595 mil. from $ 650.16 mil. for the same period one year earlier. Year-to-date earnings equaled $ 898 mil., down 3.7% year-to-year. SmithKline also reported that "discussions with FDA about OTC cimetidine continue." A joint meeting of FDA's Nonprescription Drugs and Gastrointestinal Drugs Advisory Committees unanimously concluded that SmithKiine's cimetidine data for treating heartburn were inadequate to support an OTC switch approval in early September ("The Tan Sheet" Sept. 13, p. 1). Sales of prescription Tagamet (cimetidine) grew 2% in the third quarter, according to SmithKline, which noted that an OTC version of Tagamet received "preliminary approval" from the U.K. ("The Tan Sheet" July 12, p. 1). In the third quarter, SmithKline Consumer Brands began detailing the smoking cessation aid Nicorette gum as part of its recently announced partnership with Marion Merrell Dow ("The Tan Sheet" Aug. 23, p. 1). Under that agreement, SmithKline Beecham Consumer will assume Nicorette marketing effective Jan. 1, 1994 in anticipation of an Rx-to-OTC switch of the nicotine gum. Warner-Lambert worldwide sales of consumer products advanced 9% to $ 945 mil. in the three month period ended Sept. 30, bolstered by sales of Schick and Wilkinson wet-shaving products, the Morris Plains, N.J. firm reported Oct. 19. The firm announced the purchase of Wilkinson Sword in March ("The Tan Sheet" March 29, p. 12). Consumer sector sales were flat domestically and rose 19% internationally. Listerine sales declined 8% in the U.S. to $ 63.3 mil., contributing to a worldwide sales decrease of 6.8% to $ 78.9 mil. for the quarter, according to Warner-Lambert. International Listerine sales fell 2% to $ 15.5 mil. The Listerine category includes sales of Cool Mint Listerine, which was launched in May 1992. The product was a "driving force" behind the brand's sales in the third quarter last year, according to Warner-Lambert. In the nine months, U.S. sales for Listerine were down 7% to $ 190.1 mil., leading to a worldwide sales decline of 3.7% to $ 238.7 mil. However, international sales of the brand grew 12.2% over the comparable period last year, reaching $ 48.6 mil. for the nine months. Third-quarter consolidated sales rose 2.8% to $ 1.48 bil., due largely to a 9% growth in international sales. U.S. third-quarter sales dipped 3%. Year-to-date consolidated sales climbed 3.3% to $ 4.26 bil. Warner-Lambert commented that sales results were "driven by expanded distribution and growing demand for consumer products in overseas markets," adding that the quarter's performance was negatively affected by "regulatory issues connected to the company's pharmaceutical manufacturing, as well as the worldwide operating environment for pharmaceutical products" ("The Tan Sheet" Aug. 23, p. 16). Net income declined 5.2% in the third quarter to $ 155.9 mil. For the nine months, net income totaled $ 527.9 mil., increasing 4.3% year-to-year. Excluding a $ 63 mil. extraordinary gain and a $ 27 mil. one-time charge -- both related to changes in accounting standards -- net income decreased 4.8% to $ 481.9 mil. Both net income figures include a one-time charge of $ 70 mil. ($ 45 mil. after-tax) for corporate restructuring, Warner-Lambert said. Chart omitted.
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