American Home Recalling Some Premarin Lots
Another day, another pitfall at American Home (AHP).
The Madison, N.J., drugmaker was forced to recall some 50 lots of its top-selling drug Premarin in the last two weeks after the company found some of the pills didn't disolve properly.
Premarin, a widely used hormone replacement therapy for post-menopausal women, is by far American Home's top seller, generating $1.77 billion in 1999 sales. Some 10 million American women currently use Premarin, a cornerstone of American Home's drug division for years. American Home reported 1999 drug sales of $9.5 billion.
American Home said no recalled pills ended up in retail pharmacies or patients, but were recalled from wholesalers this month. The recall was voluntary in consultation with the Food and Drug Administration, it said.American Home shares were recently trading down $1.56, or 2.4%, at $61.94. Despite the recent setbacks at the drug company, including three failed mergers and a notable product recall, American Home stock has rallied this year, outperforming the drug-stock index and posting a 60%-plus gain.
Booster Shot?One New York analyst said the recall could give a boost to new competitors in the hormone-replacement therapy market, including Johnson & Johnson's (JNJ) Ortho-Prefest and Pfizer's (PFE) FemHRT.
American Home shares outperforming drug index
ImmaterialLowell Weiner, an American Home spokesman, said the cost of the recall was "not material." He couldn't immediately say how many pills were involved. Premarin has been off patent for years, but because the drug is challenging to make, generic competitors haven't had much success in breaking into the market. Premarin, made from the urine of pregnant mares (hence the name Pre-mar-in), has over 100 components. Cenestin, made by Duramed (DRMD), is one competitor, but American Home estimates Cenestin has taken only 1% of the market since approval in 1999. "Premarin is very difficult to reproduce by any methodology," says American Home COO Robert Essner, speaking at a CIBC World Markets conference this week in New York. "We don't see anyone else coming onto the market anytime soon."
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