Drug Makers’ Profits Drop as Generics Lower Sales

LONDON -- AstraZeneca, Merck & Co., Bristol-Myers Squibb Co. and Schering-Plough Corp. on Thursday reported that third-quarter earnings fell as the arrival of cheaper generic drugs took sales and orders away from their top-selling medications.

AstraZeneca, Europe’s second-largest drug maker, said net income dropped 5% as demand for the ulcer treatment Prilosec declined in anticipation of generic rivals in the U.S. next year. Meanwhile, sales of the diabetes treatment Glucophage, made by Bristol-Myers and Merck, plunged and Schering-Plough’s revenue from the Claritin allergy pill dropped by half.

Wholesalers are cutting orders as they unload inventories of medicines that are losing patent protection.

Claritin may have cheaper rivals in the U.S. as early as December. Prilosec faces possible competition next year, and copies of Glucophage are already on the market.

AstraZeneca shares closed down 45 cents to $35.95. Merck closed down as well, by 87 cents to $50.49. Schering-Plough shares rose 43 cents to $19.12, and Bristol-Myers shares rose 38 cents to $24.17. All trade on the New York Stock Exchange.

Third-quarter net income at London-based AstraZeneca dropped to $675 million, or 39 cents a share, from $711 million, or 40 cents, in the year-earlier period.

Prilosec sales fell 14% to $1.2 billion.

Net income at New York-based Bristol-Myers, the world’s fifth-largest drug maker, fell 75% to $314 million, or 16 cents a share, from $1.25 billion, or 63 cents, a year earlier. Sales dropped 12% to $4.2 billion.

Bristol-Myers also said it plans to restate $2 billion in sales and earnings back to 2000 to account for inventory buildups at wholesalers.

The company has been reducing shipments this year to wholesalers that stocked up on discounted products.

Kenilworth, N.J.-based Schering-Plough’s net income declined 29% to $429 million, or 29 cents a share, from $601 million, or 41 cents, in the year-ago quarter.

Sales rose to $2.42 billion from $2.38 billion.