Another day, another pitfall at American Home ( AHP). The Madison, N.J., drugmaker was forced to recall some 50 lots of its top-selling drug Premarin in the last two weeks after the company found some of the pills didn't disolve properly. Premarin, a widely used hormone replacement therapy for post-menopausal women, is by far American Home's top seller, generating $1.77 billion in 1999 sales. Some 10 million American women currently use Premarin, a cornerstone of American Home's drug division for years. American Home reported 1999 drug sales of $9.5 billion. American Home said no recalled pills ended up in retail pharmacies or patients, but were recalled from wholesalers this month. The recall was voluntary in consultation with the Food and Drug Administration, it said. American Home shares were recently trading down $1.56, or 2.4%, at $61.94. Despite the recent setbacks at the drug company, including three failed mergers and a notable product recall, American Home stock has rallied this year, outperforming the drug-stock index and posting a 60%-plus gain.
"The fact that there is some apparent manufacturing or quality control issues does give these guys something of a leg up," said the analyst, who asked to remain anonymous. That said, the recall isn't likely to seriously hurt prospects for the top-selling hormone replacement therapy. But it marks another embarrassing episode for American Home. The company has been rocked by ballooning legal costs of another product recall, that of diet drugs Pondimin and Redux in 1997. The drugs were found to cause heart valve problems in some patients, and the company could ultimately end up paying as much as $9 billion in liability and other costs.
Booster Shot?One New York analyst said the recall could give a boost to new competitors in the hormone-replacement therapy market, including Johnson & Johnson's ( JNJ) Ortho-Prefest and Pfizer's ( PFE) FemHRT.
|Growth Spurt |
American Home shares outperforming drug index