Wyeth quarterly profit doubles - with layoffs The pharmaceutical's bottom line improved after it sold its stake in Amgen and cut 400 jobs in the Philadelphia area.

Posted: January 29, 2003

Wyeth said yesterday that its profit nearly doubled in the fourth quarter, after selling its stake in Amgen Inc. and cutting about 400 jobs in the Philadelphia region - and 3,150 worldwide.

Since layoffs began in mid-November at the company, based in Madison, N.J., the drugmaker has reduced its workforce here from 5,300 to about 4,900 in four locations - Radnor, Collegeville, Great Valley and King of Prussia - said Wyeth spokesman Doug Petkus.

Wyeth has also eliminated about 800 to 900 jobs at its manufacturing plant in Marietta, Lancaster County, Petkus said.

The extent of the layoffs, part of a cost-cutting effort, became public when the company, with 52,000 employees worldwide, announced its quarterly and 2002 financial results in a conference call with analysts and investors.

Wyeth spokesman Lowell Weiner said the job cuts were "in all divisions" throughout the world.

Wyeth shares yesterday rose $3.70, or 10.88 percent, to close at $37.70 after the company said fourth-quarter net income rose to $1.57 billion, or $1.18 a share, from $822.7 million, or 62 cents a share, in the last quarter of 2001. Revenue rose 3.5 percent to $3.81 billion.

Excluding Wyeth's gain on the sale of its stake in Amgen and the expenses related to job reductions and plant closures, the company had an operating profit of 65 cents a share, a penny more than the average estimate of analysts polled by Thomson First Call.

"I thought it was a decent quarter," said analyst Rita Freedman at PNC Advisors in Philadelphia. "They came out a penny ahead of what was expected. The consensus number was 64 cents. Their operating earnings were 65 cents. It was well-received by Wall Street."

Wyeth's worldwide pharmaceutical revenue rose 8 percent, and higher sales of the antidepressant Effexor and the ulcer drug Protonix more than offset lower demand for the once top-selling hormone replacement treatments Premarin and Prempro. A national study in July linked long-term use of Prempro to increased risk of breast cancer, stroke and heart disease. A second study linked the Premarin hormone therapy to an increased risk of ovarian cancer.

Struggling to overcome lower demand for its top-selling hormone treatments, Wyeth announced in October that it would trim jobs and expenses.

Fourth-quarter sales of Premarin and Prempro fell 21 percent to $337.5 million, and tumbled 9 percent for the year, the company said.

Chief financial officer Kenneth Martin said: "Two thousand two was a challenging year for Wyeth." He also warned that first-quarter profit would be lower than in the first quarter of 2002.

But total 2003 sales of the estrogen drugs should stabilize at $1.5 billion to $1.6 billion this year, and the company said it expected a version of Prempro with a lower dose of estrogen to win regulatory approval the first half of this year.

In November, Wyeth announced it would stop manufacturing its flu-injection vaccine FluShield in Marietta to concentrate on a new nasal flu vaccine. Wyeth said about 750 employees would remain at the Marietta plant to continue manufacture of a snake-bite antidote, Antivenin, and other vaccine research.

Petkus said Wyeth would continue to supply the federal government with smallpox vaccine, originally manufactured in the 1980s and stored in Marietta. It has been reconstituted and is being used now to immunize emergency-care workers and the military, Petkus said.

Wyeth used proceeds from its sale of Amgen stock to pay down debt, and the company's net debt is now "slightly above" $2 billion, Martin said.

Wyeth sold all 98.3 million shares of Amgen, the world's biggest biotechnology company, by Jan. 21. With the $4.8 billion in proceeds from the sale, plus an additional $1 billion when Wyeth sold its assets in Immunex Corp., a company acquired by Amgen, the total gain for Wyeth was $5.8 billion, the company said.

Wyeth continues to co-market Enbrel, a top-selling rheumatoid arthritis medicine, with Amgen in North America. Wyeth has the international rights to Enbrel.

Freedman at PNC Advisors said Prempro and Premarin sales would continue to be a "drag" in the first half of this year. But sales of some other Wyeth products have been "very strong," she said. Effexor, now Wyeth's top-seller, had sales of $596.9 million, up 25 percent from the fourth quarter of 2001. Ulcer medicine Protonix's sales almost tripled to $287 million.

While the drugmaker had production problems with its Prevnar pneumococcal vaccine and its ReFacto hemophilia medicine, those manufacturing disruptions have been worked out, Freedman said. This year, Wyeth also expects to sell a drug that will be used on Johnson & Johnson's drug-coated stent used in heart surgery.

Wyeth also expects this year that its new nasal flu mist vaccine will be launched in time for the fall flu season, Freedman said. "Two thousand three should definitely be better for Wyeth."

Another large pharmaceutical company, Merck & Co. Inc., said yesterday that its fourth-quarter profit rose only 2 percent, as slowing sales of its arthritis drug Vioxx and generic competition hampered revenue. The company, based in Whitehouse Station, N.J., employs 10,000 in West Point, Montgomery County.

Merck, a component of the Dow Jones industrial average, said it earned $1.89 billion, or 83 cents a share, in the fourth quarter, up from $1.86 billion, or 81 cents a share, a year earlier. Sales for the quarter were $13.9 billion, up 11 percent, because of demand for the asthma drug Singulair, its osteoporosis treatment Fosamax, and the Cozaar blood-pressure medicine.

Revenue from Merck's top five drugs rose 18 percent in the quarter to $3.98 billion. Fourth-quarter revenue of Merck's pharmacy-benefits-management subsidiary, Medco Health Solutions, was $8.44 billion, up 11 percent from $7.58 billion in the same period a year ago. For 2002, Medco revenue was $32.57 billion, up 14 percent from $28.71 billion in 2001. Merck said it still planned to spin off its Medco pharmacy-benefits unit as a separate company this summer.

Merck shares closed yesterday up $2.64, or 5.1 percent, at $54.40.

Contact staff writer Linda Loyd at 215-854-2831 or lloyd@phillynews.com.

Wyeth Employment

Worldwide totals

December 1997. . . 60,500

December 1998. . . 53,000

December 1999. . . 46,800

December 2000. . . 48,000

December 2001. . . 52,300

November 2002. . . 55,000

January 2003. . . 52,000

Wyeth (WYE)

4 qtr '02 4 qtr '01 Pct

NYSE end 12/31 end 12/31 chg

Rev (m) $3,814.0 $3,683.5 +4

Net inc (m) $1,574.0 $822.7 +91

Per share $1.18 $0.62 +90

12 mo '02 12 mo '01 Pct

end 12/31 end 12/31 chg

Rev (m) $14,584.0 $13,983.7 +4

Net inc (m) $4,447.2 $2,285.3 +95

Per share $3.33 $1.72 +94

Merck & Co. Inc. (MRK)

NYSEend 12/31 end 12/31 chg

Rev (m) $13,918.4 $12,558.0 +11

Net inc (m) $1,889.8 $1,860.9 +2

Per share $0.83 $0.81 +3

Rev (m) $51,790.3 $47,715.7 +9

Net inc (m) $7,149.5 $7,281.8 -2

Per share $3.14 $3.14 N.C.

N.C. = no change

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