Bergen Brunswig’s Profits More Than Doubled in ’88

Times Staff Writer

Bergen Brunswig Corp., one of the nation’s largest distributors of pharmaceuticals and videocassettes, on Monday reported profits of $34.7 million for its 1988 fiscal year, more than double 1987’s $15.9 million.

The Orange-based company’s fourth-quarter earnings were $7.7 million, also more than double the $3.8 million posted a year earlier.

The company credited its higher profits in fiscal 1988, which ended Aug. 31, to cost reductions and consolidations implemented in previous years.

Emil P. Martini Jr., Bergen Brunswig’s chairman and chief executive, said fiscal 1987’s lower earnings reflected costs related to “vigorous acquisition activity.” Fiscal 1988 was the company’s first 12-month reporting period following a series of acquisitions beginning fiscal 1985 and continuing through last year.


Martini also said the company has benefited from cost-cutting measures and higher sales, which expanded to nearly $3.5 billion in fiscal 1988 from $3.1 billion the year before. Fourth-quarter sales were $899 million this year, up from $784 million for the same period last year.

Industrywide Resurgence

The company’s 1988 profits were bolstered by a one-time gain of nearly $2 million from the sale of Bergen Brunswig’s former medical supply subsidiary.

Mark Felder, a securities analyst with Baltimore-based Legg Mason Wood Walker, said Bergen Brunswig’s drug distribution business is participating in an industrywide resurgence caused by a tempering of once-severe price competition.


He said the outlook for the industry is bright because of the continued aging of the population and the introduction of new and more expensive drugs. Drug distributors like Bergen Brunswig benefit from higher drug wholesale costs, Felder said, because they generally base their markups on drugs they sell to pharmacies on a percentage of the price paid to the drug manufacturers.

Commtron Corp., a prerecorded videocassette distribution company acquired by Bergen Brunswig in 1982, reported 1988 earnings of $3.7 million, up 53% from $2.5 million the previous fiscal year.

“Our video business incurred a loss in the fourth quarter of fiscal 1987,” said George E. Reinhardt, Jr., vice president and chief financial officer, “principally due to lack of good new (video) releases coming out of the major studios. Since then the quantity and quality of the releases have much improved.”