Benefits From PBM/MPC Acquisitions Assessed

Clear benefits have accrued or will accrue to some of the pharmaceutical companies which have made acquisitions in the pharmacy benefits management or managed pharmaceutical care sectors, according to Barbara Ryan and Mara Goldstein of US broker Alex Brown & Sons. Most notable among these, they say, has been Merck & Co through its takeover of Medco.

The analysts rate SmithKline Beecham as a strong buy, following its acquisition of DPS (Marketletter May 9). However, Eli Lilly's purchase of PCS, a pharmacy benefits manager (Marketletter July 18), is viewed less favorably by the analysts, who see this as a dilution of earnings.

The purchase of Medco has enabled Merck to increase substantially sales of its key US products in crowded therapeutic categories, they say, noting that Mevacor (lovastatin) sales are up 20%, those of Zocor (simvastatin) have risen 33%, Pepcid (famotidine) is up 27% and Vasotec (enalapril) sales in the USA are 20% higher. Additionally, second-quarter sales of other key products showed healthy increases. For example, US sales of Proscar (finasteride) and Prilosec (omeprazole) rose 133% and 62% respectively.