Earnings Decline At Genentech In 2nd Qtr

US concern Genentech, which is affiliated to Swiss pharmaceutical company Roche (see page 3), saw earnings for the second quarter of 1996 decline 41.7% to $21.7 billion. Earnings per share were 18 cents, down 41.9%. The firm said that the decline stems largely from an increase in the effective tax rate. Revenues in the second quarter grew 5% to $243.8 million, reflecting higher contract and royalty revenues, and increased sales of marketed products on a pro forma basis.

"From an operational standpoint, our second quarter was encouraging," commented Arthur Levinson, Genentech's president and chief executive. He added: "during the quarter, our marketed products maintained or increased their market share, we received regulatory approval to market a new indication for our flagship product Activase (alteplase), we won two important patent battles related to our growth hormone products, we received support from Roche to develop a key product in our development pipeline outside the USA, and we began to erect our new bulk manufacturing plant at Vacaville."

He also noted that the firm has implemented a new approach to R&D funding and manufacturing by international subsidiaries for certain of its development products. "This approach increases our effective tax rate in the next several years, but has potential to lower our tax rate and thereby increase earnings in the long-term," explained Mr Levinson. As a result of this decision, Genentech expects its effective tax rate to increase through 1999 and then decline as these developmental products are brought to market.