Intense generic competition for a once-key drug caused a drop in sales and earnings for the first quarter,
The news helped knock down the stock by $1.54, or 3.7%, to $40.11.
The New York-based drug company said it earned $216.6 million, or 62 cents a share, on sales of $674.7 million for the three months ended June 30. These results were enhanced by a one-time tax benefit worth 10 cents a share and by a 10% decrease in shares outstanding vs. the same period last year. The latest results compare with a profit of $229.9 million, or 60 cents a share, on sales of $782.4 million for the same period last year.
Net revenue, which includes contract revenue and other income, fell to $711.8 million from $792.8 million.
The decline in revenue and earnings was caused primarily by generic competition for the antidepressant Celexa. For the first quarter, Celexa recorded $4.2 million in sales, while for the same period last year, Celexa produced $261.1 million in sales.
Despite the generic competition, Forest actually beat Wall Street's profit estimate for the quarter, recording 52 cents a share (excluding the tax benefit) vs. the Thomson First Call estimate of 51 cents.
Forest also reaffirmed its fiscal-year EPS prediction of $2.30 vs. the consensus estimate of $2.31.
Most of the company's sales came from two drugs -- the antidepressant Lexapro ($461 million) and the Alzheimer's disease drug Namenda ($114.7 million).
Kenneth E. Goodman, the president and chief operating officer, said Lexapro hasn't experienced any setbacks among "key national accounts" since Celexa went off patent. Lexapro is a cousin of Celexa, and some analysts were apprehensive that managed care organizations would steer patients to generic Celexa or raise copayments for patients whose doctors prescribe Lexapro.
Goodman also said he expects to hear from the Food and Drug Administration in a few weeks on Forest's request that Namenda be approved for patients with mild Alzheimer's disease. Namenda is the only drug approved for moderate to severe forms of the disease.