Drug Companies Report Pain; Results for 3rd Quarter Diagnose Industry's Flagging Health
MERCK & CO., in a dramatic reflection of the pharmaceutical industry's profit woes, said it will fall short of 2003 earnings targets, and announced plans to lay off 4,400 workers in the face of lower-than-expected sales of some big drugs.</br></br>At the same time, Wyeth reported a third-quarter loss after setting aside $2 billion more to cover already sky-high claims of heart damage from diet drugs that came off the market in 1997.</br></br>The news came amid a flurry of third-quarter earnings reports from six major drug makers that offered a sobering checkup on the pharmaceutical sector's flagging health. Almost every drug company is beset with expiring patents for major products and a shortfall in new blockbusters. Competition from generics and a recent wave of over-the- counter versions of some prescription drugs are intensifying the pain at several companies.</br></br>Pfizer Inc. and GlaxoSmithKline PLC, the world's No. 1 and No. 2 two drug companies, respectively, posted stronger results than their rivals, but they continue to cut costs in the wake of megamergers that may buy them time until a new crop of blockbusters emerges. Eli Lilly & Co said net income rose 4.5%.</br></br>The results cast a pall over the stock market. Merck was down 6.5%, or $3.19, to $45.72 in 4 p.m. New York Stock Exchange composite trading, helping to drag down the Dow Jones Industrial Average. Pfizer fell 88 cents to $30.62 while Wyeth slipped 5.5%, or $2.50, to $43.30 and Schering-Plough Corp. lost 88 cents to $15.12 and Lilly fell $1.72 to $60.78, all in Big Board trading. Glaxo's American depositary shares fell $1 to $42.92, also on the NYSE.