Hard to swallow

  • Associated Press
  • Thursday, October 21, 2004 9:00pm
  • Business

NEW YORK – Merck &Co. profits plunged in the third quarter in the wake of the recall of its Vioxx arthritis drug, and Eli Lilly &Co. expanded a layoff to 1,000 workers because of falling sales of its anti-psychotic medicine Zyprexa. Both show the perils when drug makers rely on a handful of blockbuster medicines.

European pharmaceutical companies also reporting earnings on Thursday that fared better. Novartis AG reported a 21 percent profit rise, thanks to strong sales of the hypertension drug Diovan and cancer drugs. And AstraZeneca PLC said its net profit rose 51 percent even after federal regulators in the United States refused to approve the sale of Exanta, an anticoagulant that had been touted as a potential bestseller.

Lilly shares fell more than 4 percent on Thursday, and Merck’s stock closed down 0.5 percent. But shares of Novartis and AstraZeneca both closed higher, gaining 0.5 percent and 0.9 percent, respectively. And shares of Schering-Plough Corp., which returned to profitability in the third quarter, closed 1.6 percent higher.

“The blockbuster drug model is struggling,” said David Moskowitz, an analyst at Friedman Billings, Ramsey in Arlington, Va. “There are fewer and fewer of them around, and they are under threat” because generic companies are increasingly challenging patents, and insurers are resisting paying for expensive new medicines.

Merck, based in Whitehouse Station, N.J., said its net income in the third quarter slumped 29 percent to $1.33 billion, or 60 cents a share, from $1.86 billion a year earlier. Revenues for the quarter fell 4 percent to $5.54 billion from $5.76 billion a year earlier.

Earnings of Indianapolis-based Eli Lilly rose 6 percent to $755.2 million, or 69 cents a share, in the three months ended Sept. 30, from $714.4 million during the same period a year ago. The per-share earnings beat by a penny the consensus estimate by analysts surveyed by Thomson First Call.

Lilly’s revenue rose 4 percent to $3.28 billion from $3.14 billion despite a 9 percent decline in Zyprexa sales to $1.02 billion. U.S. sales of the treatment for bipolar disorder fell even further, by 22 percent, to $557.3 million, which Lilly attributed to competitive pressure and changes in stocking of the drug by wholesalers.

Lilly also announced it was eliminating about 425 more jobs as part of a restructuring to compensate for falling sales of Zyprexa. It had previously announced 575 layoffs. Chairman and chief executive Sidney Taurel said the increasing public outcry over high drug prices also was behind the restructuring, which he said should save Lilly $150 million in 2005.

Zyprexa, which has accounted for about a third of Lilly’s total revenues in recent quarters, also faces a pending patent challenge in the United States.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Image from Erickson Furniture website
From couch to coffee table — Local favorites await

Style your space with the county’s top picks for furniture and flair.

Nichole Webber: Drawing up plays for athletes and politics

The communications director for the city of Everett believes leadership is rooted in honesty, integrity and selfless commitment to others.

2025 Emerging Leader DeLon Lewis (Olivia Vanni / The Herald)
DeLon Lewis: Helping students succeed

Program specialist for Everett Community College believes leadership is about building bridges.

2025 Emerging Leader Natalie Given (Olivia Vanni / The Herald)
Natalie Given: Building trust and communicating concerns

Everett Police Department’s Public Information Officer builds relationship and better communication.

2025 Emerging Leader Scott Hulme (Olivia Vanni / The Herald)
Scott Hulme: Standing up for downtown

Business development manager for the Downtown Everett Association brings property owners, tenants and city leaders together.

2025 Emerging Leader Anthony Hawley (Olivia Vanni / The Herald)
Anthony Hawley: Creating friendships and filling pantries

Since 2021, Hawley has increased donations to Lake Stevens Community Food Bank through fundraising and building donor relationships.

2025 Emerging Leader Rick Flores (Olivia Vanni / The Herald)
Rick Flores: Learning lessons from marching band

Directs the Mathematics, Engineering, Science Achievement program at WSU Everett helps underrepresented students with tutoring, specialized courses, mentorship and support networks.

2025 Emerging Leader Melinda Cervantes (Olivia Vanni / The Herald)
Melinda Cervantes: Making sure every voice is heard

Prolific volunteer facilitates connections between Spanish-speaking public representatives and community members.

2025 Emerging Leader Megan Kemmett (Olivia Vanni / The Herald)
Megan Kemmett: Seeking solutions to any problem or obstacle

Executive director of Snohomish Community Food Bank overcomes obstacles to keep people fed.

2025 Emerging Leader Kellie Lewis (Olivia Vanni / The Herald)
Kellie Lewis: Bringing community helpers together

Edmonds Food Bank’s marketing and communications director fosters connections to help others.

2025 Emerging Leader Christina Strand (Olivia Vanni / The Herald)
Christina Strand: Helping people on the move

Community engagement specialist believes biking, walking and public transit can have a positive impact.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.