Israeli drugmaker Agis Industries reported third-quarter profits that were just 4% of its earnings in the year-ago quarter.

Agis netted NIS 758,000 in the third quarter, compared with NIS 21.5 million in the corresponding quarter of 2000.

Sales were relatively firm at NIS 294.9 million, 2% below the parallel period of last year.

The company explained its negligible profits by rising research and development costs, and by its NIS 5 million financing costs, compared with NIS 5 million financing income in the parallel quarter.

Its low profit is also partly due to the slump in Agis stock this year. Its financing costs were partly incurred through a NIS 4.3 million loss on negotiable securities: During the first nine months of 2001, Agis bought back NIS 24 million worth of its shares, lifting its interest to 12.8%. But its shares sagged by 18.5% this year.

Sales for the first nine months of 2001 increased by a slight 2% to NIS 894.2 million. Profit for that period fell to NIS 23.8 million, 62% down from the same period last year. Gross profit shrank 10% to NIS 309.5 million in that time, due to eroding domestic drug prices.

Another blow came from the Ministry of Health decision to suspend the marketing of Lipogis, based on a Bayer drug used to lower blood cholesterol. Agis estimates that the damage from the decision is about NIS 7 million a year.

What could change the trend for Agis is if its New York subsidiary Clay Park Labs passes the Food and Drug Administration reinspection. Agis believes Clay Park will soon receive FDA approvals to market two new generic products, wit more approvals coming through in 2003. Failure by Clay Park to pass the FDA check would however put the damper on Agis' profitability.