Forest Lab Profit Plunges on Charges

A hefty charge in conjunction with federal allegations that Forest Laboratories ( FRX) bribed doctors to wrongly prescribe antidepressants sent the company's profits tumbling in its fiscal fourth quarter.

During the quarter ended March 31 the company earned $92.8 million, or 31 cents per share, compared to profit of $172.8 million, or 55 cents per share, during the same period a year earlier. Revenue fell 3% to $965.5 million from $990.9 million.

The Department of Justice alleges the company offered kickbacks to doctors for prescribing the antidepressants Celexa and Lexapro and for pushing their use on children, which was not an approved indication. In its complaint the government said the drug developer offered cash payments, expensive meals and entertainment to induce doctors and others to prescribe the drugs.

The company said it is cooperating with the investigation and setting aside $170 million as a reserve for any charges.

"Until the investigation is resolved, there can be no assurance that the amount reserved by the company will be sufficient and that a larger material amount will not be required," the company said in statement.

Excluding the charge, the company said it earned 76 cents per share. Analysts polled by Thomson Reuters expected profit of 75 cents a share on revenue of $999.7 million.

Product sales fell slightly overall, with Lexapro shedding 5%. Meanwhile, sales of the Alzheimer's disease treatment Namenda rose 7.7%. Contract revenue, interest income and other income also fell.

For the full fiscal year, the company earned $767.7 million, or $2.52 per share, down from profit of $967.9 million, or $3.06 per share, the previous year. Revenue rose to $3.92 billion from $3.84 billion.

Forest Laboratories also said it expects higher profit in fiscal 2010, driven by sales of Namenda. The company expects profit between $3.45 and $3.55 per share on revenue of about $4.1 billion. The Associated Press contributed to this report.

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