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American Home posts loss
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October 18, 1999: 11:12 a.m. ET
3Q crippled by 'fen-phen' settlement; Warner-Lambert net grows
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NEW YORK (CNNfn) - Pharmaceutical company American Home Products recorded a $2.9 billion net loss for the third quarter Monday to cover a multibillion dollar settlement in the "fen-phen" diet pill litigation as well as restructuring charges at its agricultural unit.
Meanwhile, pharmaceutical maker Warner-Lambert posted a 38 percent jump in third-quarter earnings Monday, matching analysts' forecasts, as sales of its cholesterol-lowering drug Lipitor continued to soar.
American Home (AHP) lost $2.20 per diluted share, compared with profits of 46 cents per diluted share a year earlier. Excluding the special charges, the company would have earned $633.5 million, or 48 cents per share, beating the First Call consensus estimate of 47 cents per share.
AHP stock dropped 1-1/8 to 43-13/16 in early trading Monday.
American Home and plaintiffs' attorneys struck a deal Oct. 7 worth an estimated $3.75 billion to settle lawsuits filed by thousands of people who used the Redux or Pondimin weight loss pills. The drugs were pulled from the market in 1997 after they were linked to heart valve damage and other health problems.
However, that settlement could be in jeopardy, Many plaintiffs say the terms of the deal are inadequate, and they plan to pursue individual lawsuits against the Madison, N.J.-based company and its Wyeth-Ayerst pharmaceutical division.
American Home took a $4.75 million pretax charge for the settlement during the third quarter, plus a $195 million pretax charge for the restructuring of its Cyanamid agriculture products business and an inventory buyback program. The company is cutting 700 jobs and closing some of the unit's facilities.
Third-quarter net sales rose 3 percent to $3.32 billion. Pharmaceutical unit sales rose 10 percent to $2.6 billion, led by sales of the arthritis drug Enbrel, which American Home jointly markets with the biotech firm Immunex (IMNX), the estrogen drug Premarin and pneumonia medication Zosyn.
Sales of agricultural products dropped 57 percent to $130.2 million, mostly because of the Cyanamid buyback program.
Warner-Lambert posts gains
Morris Plains, N.J.-based Warner-Lambert earned $417 million, or 47 cents per diluted share, on a net basis, up from $302 million, or 34 cents per share, a year earlier.
Sales rose 19 percent to $3.2 billion. Pharmaceutical segment sales rose 30 percent to $2 billion, led by a 72 percent leap in sales of Lipitor, which totaled $981 million. Sales of the anticonvulsant Neurontin posted a 79 percent gain to $237 million.
The company also produces personal care products, breath mints and gum. Sales of Listerine mouthwash rose 7 percent to $115 million, while Dentyne gum sales were up 21 percent to $39 million.
Warner-Lambert (WLA) stock rose 1/8 to 68 Monday morning.
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