SysteMed Takes Place of Newport Pharmaceuticals : Medicine: The 20-year-old company, after becoming profitable as a mail-order prescription drug distributor, changes its name.
Newport Pharmaceuticals International Inc., anticipating the first annual profit in its 20-year history, changed its name Tuesday to SysteMed Inc. to reflect its role as a mail-order prescription drug distributor.
Newport was founded as a drug company in 1971, but sales of its drug Isoprinosine now account for only 8% of revenues. Meanwhile, a mail pharmacy subsidiary it purchased five years ago now represents 90% of sales, said Judith Woodward Archbold, SysteMed vice president and general counsel. The new name is intended to reflect that shift.
In addition, as the company is no longer located in Newport Beach and is no longer engaged in new drug development, Newport Pharmaceuticals was something of a misnomer, she said.
“Over the last five years, we have completely new management running a company that’s in a virtually new business, mail-service pharmacy, and the company is now being run on a profitable basis,” Archbold said.
The mail-order subsidiary, America’s Pharmacy Inc., had $14 million in sales when Newport bought it in 1987. Based on sales in the first six months of this year, the subsidiary now has annualized sales of about $75 million, Archbold said. It contracts with employers, medical insurance companies and health maintenance organizations to fill patient prescriptions by mail.
The prescriptions are for non-emergency maintenance drugs, typically medications taken for chronic conditions such as high blood pressure, heart disease or thyroid disorders.
By filling large quantities of prescriptions from one centralized location in Des Moines, Iowa, and by substituting generic drugs when appropriate, the company can cut costs, passing on savings of between 25% and 40% to employers and HMOs, Archbold said.
Newport Pharmaceuticals had for years invested in developing Isoprinosine, a drug approved for treatment of viral infections, including measles, genital herpes and warts. However, the company was hit with two class-action lawsuits in 1986 alleging that it misled investors in promoting Isoprinosine as a pre-AIDS treatment drug.
The suits were settled earlier this year for a total of $2.8 million, including interest, Archbold said. The settlement costs were recorded in the company’s 1990 results, with Newport losing $5.4 million on revenues of $60.4 million for the year.
However, the company has been profitable for the first two quarters of 1991, earning $584,000 on revenues of $41.3 million for the six months ended June 30. Third-quarter results, scheduled for release in two weeks, will be “pretty much in line” with that performance, Archbold said.
SysteMed stock, formerly traded under the symbol NWPH on the NASDAQ exchange, will now be listed as SYSM for common stock and SYSMG for the company’s 10% senior secured convertible notes. The common stock closed unchanged Tuesday at $3.83 per share.
