Forest Labs At Risk In Fight To Return To Profits?

Declining sales of its top two products and competition in the genericsbusiness were among the reasons Forest Laboratories gave for reporting a loss of $25 million in its 1997 fiscal year, with revenues falling 37% to L280.7 million from an all-time high of $461.8 million. In December last year, the firm issued a further profits warning in addition to the one made in September (Marketletters passim), and took major steps to reduce its trade inventory.

The firm's management has adopted a strategy to get back into the black that requires it to take on the drug industry giants more directly than before with products that compete against blockbuster products such as Eli Lilly's selective serotonin re-uptake inhibitor Prozac (fluoxetine). This approach, according to Crain's New York Business, is a risky one.

If Forest succeeds, it could see sales of more than $1 billion in five years, it was noted, with the antidepressant citalopram having potential sales of $300 million by 2000.