P&U Profits Slump On Currency And Generic Competition

As had been warned by the troubled Swedish/American drugmaker,Pharmacia & Upjohn's profits for the second quarter of 1997 were down (Marketletter July 14). In the event, P&U reported that net profits had slumped 34% to $178 million, while sales fell 4% to $1.70 billion. Earnings per share were $0.34, or 33% lower than the like, year-earlier period. For the first half of the year, group sales were down 5% to $3.34 billion, while net income (excluding non-recurring items such as restructuring, merger costs and the Biopure write-off) was down 25% at $372 million.

P&U blames the strong dollar and generic competition for the downturn on some of its products, as well as the continued effects of trade inventory accumulations at end-1996, noting that excluding currency exchange impact, turnover would have risen 2%.

The group's new president and chief executive, Fred Hassan, points out that the loss in sales, and especially profits, is exceeding the additional sales and profits from new products. "Early action steps are being taken to enhance revenues and reduce general and administrative costs," he says, and "we look forward to seeing a better-run operation."