Generics specialist Barr Pharmaceuticals has posted a 45% decline in second-quarter profits but the New Jersey-based firm has noted that the fall was only to be expected due to costs linked with its $2.5 billion acquisition of Croatia’s Pliva.
Net income decreased to $45.3 million, or $0.41 per share, but while the Pliva purchase may be hurting earnings, the unit’s contribution in terms of sales helped to push Barr’s total revenues up over 80% to $637 million. Sales of generic products made up $487 million of that total and Pliva’s overseas sales were $191 million, boosted by a strong performance in Germany, Croatia, Poland and Russia. Before the acquisition of the Zagreb-headquartered company in October 2006, Barr did not have any product sales at all in Europe or the rest of the world.
Proprietary product turnover increased 5.1% to $102 million, helped by higher sales of the firm’s morning-after pill Plan B (levonorgestrel), which was approved for over-the-counter sales in the USA at the end of last year. At the end of June, Barr had some 60 Abbreviated New Drug Applications pending at the US Food and Drug Administration targeting branded products with an estimated $30 billion in sales, and it also had 230 product registrations, representing 78 molecules, with regulatory bodies in Europe and elsewhere.
The results were an improvement on analysts’ estimates and the company reiterated its forecast for full-year earnings of $3-$3.30 per share, excluding costs associated with the Pliva acquisition and stock-based compensation, while revenues should be in the region of $2.4-$2.5 billion.
Chief executive Bruce Downey added that the integration of Pliva continues to progress well, but the wisdom of that deal is still being questioned in some quarters. Indeed, Marc Goodman, an analyst at Credit Suisse issued a note saying that “the Pliva generics business has been an area of concern for investors, but once again that line item had a solid quarter,” adding that “given the scepticism that still surrounds this name, we believe the quarter will be viewed positively”. Investors seemed to think so and the stock ended the day up 4.1% at $55.00.
