Bergen Predicts Profit Plunge

Bergen Brunswig Corp. said Wednesday that profit for the first quarter will be below expectations and sharply lower than the year-ago quarter.

The announcement sent the Orange-based distribution company’s stock plummeting $2.75 a share to a 52-week low of $17.375, a decline of 14%. The stock, traded on the American Stock Exchange, hit $26.25 earlier this year.

Bergen Brunswig is one of the nation’s largest distributors of prescription pharmaceuticals and other health care products. It is also the nation’s largest distributor of prerecorded videocassettes.

The company said earnings for its fiscal first quarter ending Nov. 30 will be about $8.5 million, or 21 cents a share. In the year-earlier quarter, the company earned $17 million, or 37 cents a share, on sales of $1.18 billion.

A major reason for the lowered earnings is a provision of $8 million for probable losses from a drugstore chain that is having trouble paying its bills, said John T. Fay Jr., a Bergen vice president.

Fay said the company is negotiating with the medium-sized chain, which he declined to name, to try to collect some or all of the amount owed.

The company also cited an “increasingly competitive marketplace” for pharmaceuticals and fewer opportunities to buy drugs from suppliers prior to annual price increases.

Pharmaceutical prices typically rise 10% to 12% a year, and Bergen usually has been able to buy drugs from manufacturers before the price hikes went into effect. Often, Bergen was able to sell the drugs to its customers at the new, higher prices, thus boosting profit.

Now the market is more competitive, and there are fewer price rises. “Manufacturers have slowed down in terms of raising their prices,” Fay said.

The company also said its directors have authorized spending up to $100 million for occasional purchases of shares of Class A stock in the open market.