Sales & Earnings In Brief

OTCs fill pharma gap for Bayer: Lower sales of Rx pharmaceuticals in the U.S., attributable to generic competition for some drugs, are counterbalanced by the "particularly pleasing growth" of Bayer HealthCare's Consumer Health segment, says Chairman Werner Wenning. During a July 29 call, Wenning noted OTC business grew 6 percent in the firm's fiscal 2010 second quarter, with Bayer Aspirinup 6 percent and Aleve up 14.3 percent. Sales of the One A Day multivitamin line, which expanded in May with the launch of Men's Pro Edge formula, grew 14.8 percent. Wenning attributed the consumer product growth to economic recovery and increased consumption in the U.S. Bayer HealthCare reported overall quarterly sales rose 6.4 percent, adjusted for currency exchange, to 4.31 billion euros ($5.6 billion under July 29 conversion rates). The German chemical and pharmaceutical giant's first-half health care sales gained 3.6 percent to reach $10.6 billion.

Alcon results keep pressure on Novartis: The eye care firm's independent director committee, as well as several analysts, says Alcon's fiscal 2010 second-quarter net sales of $1.9 billion, up 12.5 percent, hurt Novartis' bid for the remaining minority stake in Alcon. Jefferies & Co. analyst Joshua Jennings wrote July 28 Alcon's performance, which beat revenue and earnings per share projections, provides Alcon's directors "with more ammunition to claim that both revenue and cost synergies are not fully reflected" in Novartis' initial $153 per share offer (¹ 'The Tan Sheet' July 5, 2010, In Brief). Huenenberg, Switzerland-based Alcon reported net earnings gained 15.1 percent to reach $670 million in the April-June period, and were up 20.2 percent to $1.24 billion in the first half of the year. Alcon's consumer business grew a reported 9.2 percent to $226 million in the quarter, driven by the strong global performance of Systane brand artificial tears and the comparison to a weak year-ago quarter, CEO Kevin Buehler said July 27. In July, Alcon launched Systane Balance, formulated for patients with meibomian gland dysfunction.

Sanofi sales pleasantly surprise analysts: Stronger than expected sales in the second quarter and tight cost-control efforts help Sanofi-Aventis' profits climb 7.6 percent to 2.47 billion euros ($3.23 billion under July 29 conversion rates) despite tough private label competition, the firm announces July 29. The Paris-based company's sales were relatively flat - down 1.2 percent to $10.17 billion, stronger than most analysts expected. The Consumer Health Care division partly is to thank as consumer product sales jumped 65.4 percent to $755 million compared to year-ago quarter. Even excluding sales from recently acquired Chattem, the division grew organically nearly 16 percent, CEO Chris Viehbacher said. Sanofi acquired Chattem in part as an OTC switch platform for Allegra, sales of which fell 27.9 percent to $193 million in the quarter due to generic competition, the firm said (² (Also see "Sanofi Eyes Chattem As Key Building Block For Global OTC Growth" - Pink Sheet, 4 Jan, 2010.)). Sanofi expects FDA to approve the switch in the first half of 2011. Viehbacher added Sanofi plans further expansion of its consumer health business; it recently acquired consumer product firms Canderm in Canada and Nepentes in Poland ³ (Also see "Nepentes Buy Continues Sanofi Consumer Product Acquisition March" - Pink Sheet, 24 May, 2010.)).

Merck continues merger integration: Restructuring costs from Merck's merger with Schering-Plough continue eating into the firm's net income, though CEO Richard Clark says synergies gradually are coming to fruition. "Already we're seeing positive signs of what can be achieved - despite patent expiries and a challenging economy," the executive said in a July 30 release. With restructuring costs totaling $526.3 million in the second quarter and $814 million in the first half of 2010, Merck's net income dropped 51.7 percent to $752.4 million and 64.7 percent to $1.05 billion, respectively. The Whitehouse Station, N.J., firm's total sales increased nearly twofold in the April-June period, to $11.35 billion from $5.9 billion, and in the half to $22.77 billion from $11.29 billion. Global Consumer Care sales, driven by the strong second-quarter performance of Claritin and sun care products, climbed 11 percent to $422 million. Sales of the Claritin line jumped 23 percent to $132 million, Merck said.

Mead Johnson reports sales up, profits down: Infant nutritionals manufacturer Mead Johnson Nutrition's fiscal 2010 second-quarter net sales grew 6 percent to reach $764.2 million, but the company reports a sharp drop in net earnings, largely due to higher commodity costs as well as increased spending in advertising, promotions and hiring. The firm said July 29 that sales in its Asia/Latin America segment were up 19 percent, notably in Brazil, China, Hong Kong, Malaysia, Mexico and Peru. Profits were limited, however, by rising dairy prices and the costs of expansion in China and Brazil, the Glenview, Ill., company reported. In the North America/Europe segment, net sales dropped 9 percent, which MJN attributed to a change in inventory as it launched Enfamil Premium in the U.S., as well as a market contraction in the U.S. driven by a lower birthrate. The geographic trends in sales continue from those the company reported in the first quarter (⁴ (Also see "Sales & Earnings In Brief" - Pink Sheet, 3 May, 2010.)).

Hopeful signs for USANA in North America: The relatively sluggish North American market shows signs of life for USANA Health Sciences, which reports higher sales and associate numbers for the second consecutive quarter. Jeff Yates, chief financial officer for the nutritional direct-seller, said July 28 USANA has "the right mix of executive and associate leadership in this market and are optimistic that sales and active associates will continue to increase." Second-quarter sales in North America were flat, up 1 percent from the year-ago quarter to $62.1. However, Asia Pacific recently replaced North America as USANA's dominant region - Asia Pacific sales climbed 29.5 percent to $63.9 million in the quarter ended July 3. The Salt Lake City-based company reported overall net sales up 12.4 percent to $126 million in the quarter, while net earnings jumped 22.5 percent to $10.8 million, thanks to improved production efficiencies such as lower raw material and freight costs, Chief Operating Officer Fred Cooper said.

Alere consumer business dips: Second-quarter consumer diagnostic revenues drop 26.6 percent to $23.5 million, Alere reports July 28, while adjusted gross margins for the segment were 27 percent, compared to 21.1 percent in the year-ago period. The Waltham, Mass., firm said product revenues from its joint venture with Procter & Gamble also fell 9.2 percent to $48.5 million, attributable largely to year-over-year changes in exchange rates. Alere's revenues from products, services, licenses and royalties in the April-June period reached $523 million, a 19.2 percent gain. However, the firm absorbed a $2 million net loss compared to $4.7 million in income in the year-ago period. Alere changed its name from Inverness Medical Innovations in May (⁵ 'The Tan Sheet' May 24, 2010, In Brief).

Reliv plots turnaround: A slate of strategic initiatives to boost Reliv International's flagging sales hopefully will gain traction in the remainder of 2010, the company says July 29. The nutritional direct-seller acknowledged a challenging second quarter, as net sales fell 6.1 percent to $18.8 million and net income was halved to $206,020. CEO Robert Montgomery said the Chesterfield, Mo., firm plans to increase distributor sponsoring and retention, improve sales force development, refresh Reliv's brand and enhance product promotion. The Team Reliv race sponsorship program is geared toward spreading brand awareness among fitness-minded consumers in the U.S., where sales dipped 9.5 percent to $15.9 million in the April-June period (⁶ (Also see "Sales & Earnings In Brief" - Pink Sheet, 3 May, 2010.)).