Serono this morning revealed an unexpected $725 million one-time charge relating to litigation over the sales and marketing of its AIDS wasting product Serostim (somatropin), sending its first quarter 2005 results into a tailspin and net loss of $568 million. The news caused the company’s shares to shudder across Europe this morning, dropping around 7% on stock markets across the region.
The issue was thrown into the limelight earlier this year after a former employee was accused of bribing doctors with an all-expenses-paid trip to France in return for writing prescriptions for Serostim [[17/12/04b]]. However, the company was originally subpoenaed in 2001 to hand over documentation relating to the sales and marketing of Serostim. And, while no final agreement has yet been reached, Serono believes talks are sufficiently advanced to allow it to estimate the final financial sting.
Meanwhile, the multiple sclerosis therapy Rebif (interferon beta 1a) has proved a winner again for Serono, with sales up 13% to $293 million for the first three months of this year and US market share at an all-time high with 22% of new prescriptions at the end of the quarter. Overall, revenues jumped an impressive 8% to $604 million during the quarter, but, even excluding this one-time charge, Serono’s net income tumbled 12% to $93 million.