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Global Sales Of Pharmaceutical Drugs Made In P.R. Up 1.8%

Sales affected by Merck’s withdrawal of Vioxx, other companies’ legal problems


November 18, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

Global sales of eight pharmaceutical companies’ locally manufactured key products increased a slight 1.8% in the third quarter of 2004 (3Q04), reflecting Merck’s voluntary recall from the market of Vioxx, which had annual sales of $2.5 billion, and other pharmaceutical companies’ legal and financial woes.

CARIBBEAN BUSINESS analyzed the 3Q financial reports of Abbott Laboratories, Amgen, Bristol-Myers Squibb (BMS), Eli Lilly, Merck, Pfizer, Schering-Plough, and Wyeth. The companies reported total global earnings of $8.6 billion on sales of $40.9 billion in 3Q04, compared with $6.4 billion in earnings on $39.1 billion in sales during the year-ago quarter. Global sales of the 52 pharmaceutical drugs manufactured in Puerto Rico by these eight companies reached $32.2 billion in 3Q04, up from $31.3 billion in 3Q03.

Merck in deep trouble

In 3Q04, few of the major pharmaceutical companies failed to make headlines because of some trouble with regulatory agencies. But it was Merck that generated the biggest news when it withdrew Vioxx from the market in September, a move made in response to a company-sponsored study that found a doubling of the risk of heart attacks or strokes in patients taking the arthritis painkiller for over 18 months. Merck now faces investigations by the federal Justice Department and Securities & Exchange Commission (SEC) into whether it had failed to disclose this information since 2000.

As of Oct. 31, Merck had been named in more than 375 lawsuits, representing more than 1,000 plaintiff groups alleging to have suffered side effects from Vioxx. With Merrill Lynch estimating Merck’s liability from Vioxx as high as $12 billion, the pharmaceutical company’s stock price has fallen more than 40% since Vioxx’s withdrawal, and Merck shareholders are suing for the estimated $42 billion decline in the company’s value.

Merck got more bad news last week when, for the first time in a decade, Moody’s Investors Service lowered its long-term debt rating from "Aaa" to "Aa2." Moody’s said it will keep the company under review for a possible further downgrade.

One man’s loss is another’s gain

The one most likely to benefit from Merck’s downfall is Pfizer with its two arthritis treatments, Celebrex and Bextra. Celebrex’s sales rose almost 14% from 3Q03 to $797 million in 3Q04, while Bextra’s sales rose 37% to $324 million. The two Pfizer drugs were poised to take over Vioxx’s prescription sales in the growing arthritis/Cox-2 Inhibitors therapeutic market, which last year reported drug sales of $5.6 billion.

But Pfizer’s Bextra has encountered problems of its own. According to a study presented at last week’s American Heart Association meeting in New Orleans, the incidence of heart attacks and strokes in 5,930 patients participating in 12 trials is more than twice as high in those given Bextra as in those given placebos.

Pfizer’s president of worldwide development, Joseph Feczko, has refuted the findings. "The results of that particular study are unsubstantiated conclusions about the cardiovascular safety of Bextra and haven’t been published in a medical journal or subjected to independent scientific review. In contrast, [an analysis] published earlier in the peer-reviewed American Journal of Therapeutics stated that short- and intermediate-term treatment with Bextra wasn’t associated with an increased incidence of thrombotic osteoarthritis and rheumatoid arthritis patients," he said.

Nevertheless, Pfizer said it would probably add a black-box warning on Bextra’s label about a rare but sometimes life-threatening side effect called Stevens-Johnson Syndrome, where a person’s skin, mouth, and eyes become horribly blistered. While the reaction is common in different medications, including Pfizer’s Celebrex, it seems to occur more often in patients taking Bextra. Time will tell whether Bextra can achieve Pfizer’s projected annual sales of $1.7 million by 2005.

Abbot, Amgen, Schering-Plough

Abbott’s increase in third-quarter sales and earnings matched analysts’ expectations and is calling attention to the company’s introduction of new products. Harry Rodriguez, general manager of the Puerto Rico operations and vice president of Abbott Laboratories, is looking forward to next year’s preinauguration of the company’s new biotechnology plant in Barceloneta.

"Construction will end this month, and we expect to begin the one-year validation process in December. In 2005, we expect to finish the validation and begin production of Humira, Abbott’s best-selling arthritis drug. So far, we are within budget and recruitment is going fine," said Rodriguez, who added that he is also working on transferring additional products to Puerto Rico.

Surprisingly, Amgen, the largest biotechnology company in the U.S., reported a 60.9% drop in earnings from $603 million in 3Q03 to $236 million in 3Q04. The sharp drop was due to its acquisition of Tularik Inc., a research & development company focused on the discovery of oral medicines to treat cancer, inflammation, and metabolic disease. Amgen’s Epogen, Aranesp, and Neulasta generated sales gains in 3Q04, while sales of Neupogen fell 8.5%.

Two of Eli Lilly’s three locally manufactured drugs posted losses (Zyprexa and Prozac), mostly because of competition from other companies’ drugs. Evista, however, saw a 2.5% increase.

Schering-Plough is no longer the poster child for investigations by regulatory authorities and federal agencies. Its sales in 3Q04 held steady at $2 billion, and its earnings improved from a loss of $265 million to a gain of $14 million. Sales of Zetia, one of the company’s best sellers, more than doubled to $344 million in 3Q04.

Legal woes

BMS, Eli Lilly, and Wyeth are contending with old and new legal challenges. The SEC has launched an informal inquiry into BMS’ companies in Germany, and the U.S. Attorney’s Office for the Northern District of Texas has requested records related to the company’s pricing, sales, and marketing practices. BMS also revealed in its quarterly filing with the SEC that it is conducting an internal review of its pharmaceutical operations in Mexico.

Good news is that revenue from Abilify, BMS’ treatment for schizophrenia, went from $101 million in 3Q03 to $165 million in 3Q04, a 63.4% gain. Sales might continue rising if rival Zyprexa by Eli Lilly doesn’t beat charges that its weight-gain side effect could expose patients to cardiovascular disease. Sales of Sustiva, an inhibitor used in the treatment of HIV/AIDS, rose to $157 million.

Wyeth’s 9.8% increase in sales and exceptional 428.6% increase in earnings were driven by four key products, two of which—Effexor and Zosyn—are manufactured in Puerto Rico. Still, the company continues to face lawsuits from patients claiming side effects from diet drugs Pondimin and Redux.

A 49.7% reduction in sales of Premarin, a hormone replacement therapy (HRT), is prompting Wyeth to consider marketing other low-dose products such as Prempro. Pfizer’s license agreement with the University of Rochester to develop and market a specific class of nonhormonal drug to treat hot flashes associated with menopause could pose another risk to Wyeth’s HRT products.

This Caribbean Business article appears courtesy of Casiano Communications.
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