Drug Firms’ Profits Rise on Strong Sales
Three leading U.S. drug makers posted robust earnings for the third quarter on strong sales, lifting shares of the drug sector above the broader market Tuesday.
Pfizer Inc., the No. 2 U.S. drug maker after Merck & Co., beat Wall Street forecasts with a 36% rise in operating profit, helped by soaring sales of Viagra and other drugs. New York-based Pfizer also said it expects full-year results to be at the high end of analyst estimates.
Johnson & Johnson exceeded analyst estimates for the latest quarter with healthy sales of its drugs and medical devices.
No. 3 Bristol-Myers Squibb Co.’s double-digit earnings increase met analyst expectations, with help from its cancer treatment Taxol and diabetes drug Glucophage.
On the New York Stock Exchange, Pfizer shares rose $2.94 to close at $39.94, leading the 15-stock Amex Pharmaceutical Index to a 4.5% gain, its biggest of the year. Johnson & Johnson gained $5.25 to close at $99.75, and Bristol-Myers was up $4.63 at $76.13, also on the Big Board. Merck also gained, adding $2.75 to close at $74.94 on the NYSE.
Pfizer’s operating earnings increased to $906 million, or 23 cents per share, 2 cents better than Wall Street expectations, on a 20% jump in revenue to $3.99 billion.
The profit rise came despite sharply limited use of its antibiotic Trovan in the United States after the Food and Drug Administration said 14 cases of acute liver failure were “strongly associated” with the drug.
Sales of the company’s impotence drug, Viagra, soared 77%, and sales of blood-pressure medication Norvasc grew 17%.
Johnson & Johnson’s earnings grew 14% to $1.1 billion, or 80 cents a share, 2 cents higher than expectations. Revenue at the New Brunswick, N.J.-based company--which also makes consumer products under such brands as Band-Aid and Neutrogena--rose 18% to $6.75 billion.
Sales in Johnson’s drug unit rose 24% to $2.6 billion, spurred by Procrit, a drug licensed from Amgen Inc., and Risperdal for schizophrenia. Risperdal is less likely than older, cheaper drugs to cause side effects.
Bristol-Myers said strong sales of prescription drugs in the United States helped lift its earnings 14% to $1.1 billion, or 54 cents a share. Revenue increased 11% to $5.04 billion at the New York-based company. Sales of the diabetes pill Glucophage soared 57% to $349 million as more people tried it to avoid insulin injections.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* America West Holdings Corp. said its net income rose to $22.2 million, or 57 cents a share, beating estimates of 51 cents, from $21.9 million, or 49 cents. The airline operator’s revenue rose 11% to $552.8 million.
* Balance Bar Co., the Carpinteria-based maker of nutrition foods, reported third-quarter net income of $2 million, or 16 cents per share, compared with $1.4 million, or 11 cents, a year ago. Sales rose 33% to $28.6 million.
* Cadiz Inc., a Santa Monica-based agricultural resources firm, reported third-quarter net income of $3 million, or 9 cents per share, contrasted with a net loss of $4.9 million, or 15 cents, a year ago. Revenue rose 33% to $60.6 million.
* Coca-Cola Enterprises Inc. said profit grew 20% in the third quarter to $104 million, or 24 cents a share, as it raised prices in the U.S. and as European sales rebounded following a recall. The results exceeded analyst forecasts by 3 cents. Revenue was up 8% to $3.83 billion. The company also said Chief Executive Henry Schimberg, 66, will retire Dec. 31, four months earlier than expected. Chairman Summerfield Johnston, 67, was named chief executive until a permanent replacement is hired. The company is 40% owned by Coca-Cola Co., which is expected to report results Thursday.
* Commerce-based 99 Cents Only Stores reported third-quarter net income of $8.2 million, or 32 cents per share, compared with year-ago net income of $6.7 million, or 27 cents, on fewer shares outstanding. Sales jumped 37% to $106.8 million. Sales at stores open at least a year rose 6%.
* Northwest Airlines Corp. reported third-quarter profit of $180 million, or $1.96 a share, a turnaround from a year-ago loss of $224 million, or $2.91, caused in part by a two-week pilots strike. The results missed analyst estimates of $1.98 a share. Revenue rose 47% to $2.84 billion, less than the carrier expected. Northwest also warned that its fourth-quarter financial results “could be adversely impacted” if fares continue to be held down by industry overcapacity and if fuel prices keep rising.
* Occidental Petroleum Corp.’s profit from operations soared to $125 million, or 35 cents a share, from $3 million, or 1 cent, a year ago. The results far exceeded the 25-cents-a-share average estimate of analysts polled by First Call Corp. Estimates ranged from 19 cents to 30 cents. The Los Angeles-based company said higher oil prices, cost-cutting and lower-than-expected tax rates helped it beat estimates. Sales rose 24% to $2.1 billion. It said earnings from oil and gas sales were $278 million, up from $61 million a year ago.
Chemical division earnings were lower because of higher raw materials costs.
* Philip Morris Cos. said its operating profit rose a slight 2% in the third quarter to $2.1 billion, or 87 cents a share, in line with estimates, as growth in its Kraft food and Miller beer units helped offset falling profit from cigarettes. Sales rose 6.9% to $19.9 billion. Earnings at Kraft increased 7% on cost-cutting and higher sales, particularly from beverages and new products. Miller’s profit was up 19% with help from higher prices and newly acquired brands from Stroh Brewery Co. and Pabst Brewing Co. U.S. tobacco profit fell about 2% but revenue grew 25% on higher prices.
* Pacer Technology, the Rancho Cucamonga-based maker of Super Glue and other adhesive products, reported fiscal first-quarter net income of $1 million, or 6 cents per share, compared with $957,000, or 5 cents, a year ago. Revenue rose 4% to $14.3 million.
* Southwest Airlines said its net income slipped 2% to $127 million, with per-share earnings flat at 24 cents, citing higher fuel costs and flight cancellations in mid-September due to Hurricane Floyd. Southwest’s results matched analyst forecasts. Revenue rose 13% to $1.23 billion.
* Textron Inc.’s third-quarter profit rose 35% to $146 million, or 95 cents a share, a penny better than estimates, as all divisions performed well. The maker of Cessna airplanes and Bell helicopters said revenue rose 15% to $2.71 billion.
