Pharmacia & Upjohn, Monsanto Meet Expectations - TheStreet

Updated from 9:59 a.m. EST

Pharmacia & Upjohn

(PNU)

and

Monsanto

(MTC) - Get Report

, in the process of

merging into a pharmaceutical company with total sales of $17 billion, both reported earnings in line with Wall Street's expectations on strong drug sales.

For the fourth quarter ended Dec. 31, Pharmacia earnings rose 11% to $261 million, or 50 cents a diluted share, from $235 million, or 45 cents a share, a year earlier. That matched the consensus estimate of analysts polled by

First Call/Thomson Financial

.

Revenue rose to $1.94 billion from $1.77 billion a year ago. The company experienced an 18% increase in U.S. prescription sales, driven by the strong performance of key products, indicating that earnings-per-share growth is driven more by an improved product mix than cost savings. Sales of leading glaucoma drug Xalatan was up 53% to $160 million; colon cancer treatment Camptosar was up 43% to $83 million; bladder treatment Detrol was up 33% to $93 million; and growth hormone Genotropin was up 13% to $135 million.

Gross margins also improved significantly, up 470 basis points to 75.5%.

Peapack, N.J.-based Pharmacia was down 5/8, or 1%, to 51 1/4 in midday trading Thursday. (At the close Thursday, Pharmacia was down 1 13/16, or 3.5%, to 50 1/16.)

For the fourth quarter ended Dec. 31, Monsanto earnings quadrupled 326% to $115 million, or 18 cents a diluted share, from $27 million, or 5 cents a share, a year earlier. That too matched the First Call estimate. The numbers exclude income from discontinued operations and costs associated with the

failed merger between Monsanto and

Delta and Pine Land

(DLP)

. Including them, earnings would have come in at $69 million, or 10 cents a share.

Revenue rose 35% to $2.34 billion from $1.73 billion a year ago.

St. Louis-based Monsanto was down 1/8 to 42 1/8. (At the close Thursday, Monsanto was down 15/16, or 2% to 41 5/16.)

Robert Shapiro, Monsanto's chairman and chief executive, ascribed the strong performance to the launch of the Celebrex arthritis treatment, as well as strong growth in Roundup herbicide and seed sales. "We also made important progress in strengthening our balance sheet," he said in a statement. "We reduced debt through management of capital expenditures, and working capital as a percentage of sales declined in 1999 when compared with working capital as a percentage of sales in 1998."

Launched in late January 1999, Celebrex sales exceeded $1.5 billion in 1999, including more than $500 million in the fourth quarter.

The merger, which would be the latest in a spate of consolidations in the industry, is expected to close in the first half of the year. Pharmacia agreed to merge with Monsanto in December, but apparent dissatisfaction from shareholders could block an eventual deal, some analysts say. However, both companies deny there are problems.

In fact, the two companies provided additional financial deals for the proposed merger earlier this month. It's expected to close in the first half of the year.