Strong Sales of Top-Selling Drugs Boost Pharmaceutical Firms' Earnings

Boosted by top-selling drugs, pharmaceutical stocks turned in strong first-quarter earnings performances.

SmithKline Beecham (SBH), Bristol-Myers Squibb (BMY), Baxter International (BAX) and Genzyme General (GENZ) all beat Wall Street's expectations, while Schering-Plough (SGP) met estimates.

SmithKline Beecham, which will merge this summer with fellow British company Glaxo Wellcome (GLX) to form Glaxo SmithKline, said that for the first quarter ended Mar. 31, pre-tax profit rose 10% to 562 million pounds ($887.82 million), or 55.5 cents per American depositary receipt, from 510 million pounds, or 48.9 cents per ADR, a year earlier. The consensus estimate of analysts polled by First Call/Thomson Financial was 54 cents.

Revenue rose 9% to 1.99 billion pounds from 1.83 billion pounds a year ago, on the strength of $156 million in sales of Avandia, a treatment for type 2 diabetes.

Glaxo reported sales of 2.125 billion pounds ($3.4 billion), an increase of 13% at constant exchange rates from 1.901 billion pounds a year ago.

SmithKline Beecham was up 1 7/8, or 3%, to 69 1/4 in Thursday midday trading, while Glaxo was up 1 5/8, or 3%, to 61 11/16. (SmithKline Beecham finished up 13/16, or 1%, at 68 3/16, while Glaxo closed up 1/2, or 0.8%, at 60 9/16.)

After plummeting as much as 28% Wednesday on news it had withdrawn its application for potential blockbuster drug Vanlev, a treatment for high blood pressure, Bristol-Myers Squibb reported a 15% rise in profit on Thursday.

For the first quarter ended Mar. 31, net earnings rose 15% to $1.22 billion, or 61 cents a diluted share, from $1.07 billion, or 53 cents a share, a year earlier. The consensus estimate of analysts polled by First Call/Thomson Financial was 60 cents.

Revenue for the New York-based company rose to $5.26 billion from $4.85 billion a year ago on robust sales of diabetes drug Glucophage, which rose 51% to $426 million, and cardiovascular drug Plavix, which rose 128% to $201 million. However, sales of Pravachol, which reduces cholesterol, dropped 5% to $461 million.

Shares of the company were down 1, or 2%, to 49 15/16 in Thursday midday trading. (Bristol-Myers closed down 1 5/16, or 3%, at 49 5/8.)

Baxter International, which is the second-largest manufacturer of medical products, said that for the first quarter ended Mar. 31, net income rose to $191 million, or 65 cents a diluted share, from $162 million, or 55 cents a share, a year earlier. The consensus estimate of analysts polled by First Call/Thomson Financial was 64 cents.

The figures exclude both the operations of Edwards Lifesciences (EW), which Baxter spun off as a separate publicly held company on Mar. 31, and a $27 million charge taken in 1999 for the adoption of a new accounting standard.

Revenue rose 8% to $1.58 billion from $1.46 billion a year ago, due mostly to higher sales of the company's blood-related and intravenous fluid products.

Harry Kraemer, chairman and chief executive of Baxter, based in Deerfield, Ill., said in a statement that for the full-year 2000, the company expects to achieve sales growth of about 10% and net income growth in the mid-teens, as well as the generation of more than $500 million in operational cash flow.

In Thursday morning trading, shares of Baxter were up 5/8, or 1%, to 58 7/8. (Baxter closed up 1 1/2, or 3%, at 59 3/4.)

Schering-Plough, based in Madison, N.J., said earnings rose 17% because of strong sales of its top-selling allergy drug Claritin and antiviral/anticancer agent Intron A.

The company said that for the first quarter ended Mar. 31, net income rose to $628 million, or 42 cents a diluted share, matching expectations. This compared to $539 million, or 36 cents a share, a year earlier.

Revenue rose to $2.41 billion from $2.19 billion a year ago. Worldwide sales of Claritin rose 18% to $665 million, while Intron A sales were up 23% to $336 million.

Richard Jay Kogan, chairman and chief executive of Schering-Plough, said in a statement that the company should meet the consensus estimate of $1.64 in earnings-per-share growth for 2000, while research and development expenses will total $1.4 billion, an increase of 15%.

Shares of Schering-Plough were up 3/16 to 40 11/16 in Thursday morning trading. (Schering-Plough finished down 1/2, or 1%, at 40.)

Cambridge, Mass.-based Genzyme General said that for the first quarter ended Mar. 31, earnings rose to $47.8 million, or 53 cents a diluted share, from $43.2 million, or 49 cents a share, a year earlier. The consensus estimate of analysts polled by First Call/Thomson Financial was 51 cents.

The numbers from this year do not include a pre-tax gain of $20.3 million, or a post-tax gain of $16.4 million, because of its investment in Genzyme Transgenics (GZTC). The gain was partially offset by a pre-tax charge of $19.5 million, or a post-tax charge of $12.5 million, for the initial amount payable to Synpac of North Carolina for the rights to develop and commercialize a treatment for Pompe disease.

Revenue rose to $170.63 million from $150.77 million a year ago.

In Thursday morning trading, shares of Genzyme were up 1 5/8, or 4%, to 42 3/8. (Genzyme finished up 1 9/16, or 4%, at 42 5/16.)

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