Johnson & Johnson
shares fell sharply Friday after the company withdrew from the market a drug under scrutiny by the
Food and Drug Administration
The shares tumbled 6 15/16, or 9%, to 73 1/16 in midday trading as Wall Street analysts slightly lowered their earnings estimates.
, a unit of Johnson & Johnson that sells the heartburn medication cisapride under the name Propulsid, said it will stop marketing the drug and distribute it only to patients who have not been helped by other treatments.
The FDA approved Propulsid for heartburn treatment in 1993, but the agency began receiving reports of patients dying by the next year. The agency, which has received reports of 80 deaths related to the medication, had scheduled an April 12 meeting to discuss proposals to ban or seriously restrict the drug's use.
Though several Wall Street analysts lowered their ratings on the stocks and predicted sizeable reductions in revenue, most expected little change in the company's overall earnings.
"This is news that we've been discussing for months," said Frederick Wise, analyst for
. "Many feared that the drug would be taken off the market completely. It has not." Wise rates the stock a buy, and his firm has not done underwriting for Johnson & Johnson.
The company will still sell the drug until mid-July; then doctors will be required to document that other drugs have failed before prescribing Propulsid.
Sales of the drug totaled around $950 million in 1999, and the company had previously told analysts it now expects to make around $250 million to $300 million in worldwide sales this year. Analysts predict total annual revenues of around $30 billion for the company this year.