David Teather in New York
Thursday October 23, 2003
The Guardian
Merck, the third largest drugs maker in the world, yesterday said it would cut 4,400 jobs and warned on full-year profits, setting the tone for a difficult day across the American pharmaceutical industry.
Pfizer, the number one drugs firm, lowered expectations for the current period as it recorded a 5% drop in third-quarter profits. Wyeth and Schering-Plough both posted losses for the quarter as they increased reserves set aside to cover the cost of various legal battles.
The job cuts at Merck represent about 5% of the company's workforce. It said full-year profits would fall by up to 7%, blaming disappointing sales of its big name drugs, especially arthritis medicine Vioxx. The company also said that efforts to reduce over-stocking by wholesalers would reduce revenues by up to $750m (�443m) in the current quarter.
During the third quarter, Merck profits slipped marginally from $1.88bn to $1.86bn. Sales were 6% higher at $5.8bn.
The pharmaceuticals industry worldwide has been suffering a dearth of new blockbuster drugs and increased competition from generics as existing patents run out. Merck increased the amount of money it is ploughing into research and development by 15% during the quarter.
Pfizer said its drop in earnings to $2.24bn had been caused by unexpectedly high costs associated with its acquisition of Pharmacia. Excluding one-offs the company reported a 20% increase in earnings.
Pfizer reported strong sales of some its key drugs. The impotence treatment, Viagra, increased sales by 9% to $476m despite the introduction of rival pills by Eli Lilly and a joint venture of GlaxoSmithKline and Bayer.
Wyeth, which makes Advil painkillers, reported losses of $426m against profits of $1.4bn a year ago.
Schering-Plough recorded losses of $265m. The figures included an addition of $350m into the company's legal reserves relating to federal investigations in Massachusetts and Pennsylvania into the company's marketing, sales and clinical-trial practices.
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