Boosted by sales of its anti-ulcer drug, pharmaceutical giant AstraZeneca (AZN) - Get Report today reported third-quarter earnings that beat analysts' expectations, while rival Pharmacia & Upjohn (PNU) reported earnings that hit the mark set by Wall Street.
Shares of both drug makers rose in midmorning trading. AstraZeneca was up 7/16 to 46 5/16, while Pharmacia jumped 2 3/4 to 54 as the broader market rallied.
For its third quarter, AstraZeneca posted net income, before one-time gains, of $657 million, or 37 cents a diluted share, a 43% surge from the year-earlier total of $458 million, or 26 cents a share. The
First Call/Thomson Financial
poll of analysts called for AstraZeneca to earn 33 cents a share.
The company said it expects profit growth to rise 10% for the year. Much of the growth is linked to
, the anti-ulcer drug. But while Losec sales had been strong this year, AstraZeneca said it expects them to slow in the fourth quarter. Meanwhile, the company plans to cut 450 jobs from its agrochemicals division, where sales continued to fall.
Overall, revenue rose 22% to $4.3 billion from $3.5 billion in the comparable 1998 quarter for the company, which was created last spring when the U.K.'s
for $40 billion in stock.
"These results are further strong evidence that the merger is on track and we remain on target to achieve strong health care double digit sales and profit growth for the year," Tom McKillop, AstraZeneca's chief executive, said in a statement.
Pharmacia posted a 12% increase in net earnings to $246 million, or 47 cents a diluted share, from $219 million, or 41 cents a share, a year earlier. A consensus of analysts polled by First Call expected the company to earn 47 cents a share.
U.S. prescription sales rose 17%, much in part to
, a drug for glaucoma that has become Pharmacia's top-selling product.
Ian C. Sanderson, an analyst with
, said the company's base stock in the U.S. performed somewhat weakly, but analysts had been expecting that to happen for most of the year. Now, Sanderson said Wall Street will see how quickly Pharmacia integrates the newly acquired
, a drug discovery and development firm.
"Once investors get comfortable for them to manage Sugen, this could be a very good stock in 2000," said Sanderson, who gives Pharmacia a buy rating. His firm hasn't done underwriting for Pharmacia. "There aren't many companies with new products next year, so this company has some possibilities."
Company executives gave a rosy outlook for the final quarter.
"For the full year 1999, we now anticipate that we will deliver our first-ever double digit increase in sales," Fred Hassan, the chief executive, said in a statement.