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Drugmakers' profits rise
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April 25, 2001: 3:29 p.m. ET
Bristol-Myers edges past forecasts; AHP, Pharmacia meet 1Q estimates
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NEW YORK (CNNfn) - A number of major U.S. drug companies reported improved first-quarter results Wednesday that met or edged past Wall Street expectations.
Bristol-Myers Squibb Co. (BMY: Research, Estimates), the nation's fourth-largest drug maker, said earnings from continuing operations gained 10 percent to $1.2 billion, or 63 cents a share, in the period. That's 1 cent a share better than forecast by earnings tracker First Call, and up from the $1.1 billion, or 56 cents a share, it earned on the same basis a year earlier.
Sales gained 5 percent to $4.7 billion. The company said it is comfortable with the full-year EPS forecast of $2.41 from First Call.
Bristol-Myers Squibb said its previously announced plans to spin off beauty products unit Clairol and orthopedic unit Zimmer are on track, and it expects bids for Clairol next month.
Procter & Gamble Co. expressed interest in bidding for Clairol last November.
American Home Products Corp. (AHP: up $1.61 to $55.96, Research, Estimates), the nation's No. 6 drugmaker, earned $733.6 million, or 55 cents a share, in the quarter, up from $634.9 million, or 48 cents a share, a year earlier. The year-ago results exclude one-time items and fees related to ending merger talks with former rival Warner Lambert Co., which since has been acquired by Pfizer Inc.
Sales grew 8 percent to $3.45 billion from $3.20 billion, but the company said without changes in currency exchange rates it would have had an 11 percent increase in revenue.
"There were no surprises from AHP. I think that's a good trend in general," said Jeff Chaffkin, an analyst at UBS Warburg, who pointed to the absence of costly special charges such as the ones the company has taken in recent quarters for diet drug fen-phen and other matters.
"Just being clean with no charges and no unusual swings in certain areas is a good sign," he said.
Peapack, N.J.-based Pharmacia Corp. (PHA: up $1.08 to $49.09, Research, Estimates) said Wednesday its first-quarter profit rose 19 percent due to potent sales of its arthritis, cancer and glaucoma medicines.
The maker of the arthritis drug Celebrex and glaucoma medicine Xalatan posted adjusted earnings from continuing operations of $423 million, or 32 cents per share, in line with First Call's forecast and up from $354 million, or 27 cents per share, in the year-earlier period.
Adjusted results exclude items related to the acquisition of a unit of Monsanto Co. (MON: up $0.56 to $34.15, Research, Estimates) last year.
"Pharmacia reported earnings growth of 19 percent, but the pharmaceutical side was up more than 20 percent by itself, so that's the sustainable long-term piece when they spin off agriculture," Chaffkin said.
Pharmacia reported an 8 percent jump in first-quarter sales to $4.51 billion from a year ago, with sales of Celebrex increasing 24 percent $649 million.
"I like to say 'show me the money,' and the drug industry is showing the money with their earnings. All three major drug firms today had good numbers," said portfolio manager David Saks of SG MedScience Funds.
"This is a theme that I think investors are missing, because as tech and retail companies continue to warn about profit shortfalls, there are no revisions in the drug area," Saks said.
"The fundamentals for big pharmaceutical firms are fine. Cash is fine to support growth, and earnings are meeting the targets. I think investors are taking some of that for granted and ignoring it," Saks added.
In addition, generic drug maker Ivax Corp. (IVX: up $3.55 to $36.95, Research, Estimates) said first-quarter profit more than doubled, driven by sales of its copycat version of ovarian and breast cancer medicine Taxol, to 36 cents a share from 17 cents a share a year earlier, beating Wall Street forecasts of 26 cents a share.
-- from staff and wire reports 
-- from staff and wire reports
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