US Economic Slowdown Affects Larger Firms

Some of the large US companies with a business focus in chemicals and pharmaceuticals have been adversely affected by the slowdown in the US economy, which looks set to continue into the third quarter.

- Drug delivery system company Alza Corporation's net sales in the second quarter of 1995 declined slightly due to shipments of launch quantities of Glucotrol XL (glyburide) in the 1994 second quarter. Royalties and fees in the quarter were $34.2 million, compared with $28 million a year earlier. This reflects a reduction of over $2 million resulting from additions to the reserve established in the third quarter of 1994 to account for a potential reduction in royalty income from Procardia XL (nicardipine) due to a US patent issued to German pharmaceutical firm Bayer. Total revenues amounted to just over $83 million, up 20.1%. The company's R&D spend grew 24.2% to $24.1 million. R&D revenues increased to $23.5 million in the second quarter due to increased product development activities undertaken on behalf of Therapeutic Discovery Corporation. Alza and TDC currently have more than 20 products in development, and Alza has an option to license each product developed by TDC for worldwide commercialization.

- Baxter International said the 6% increase in sales in the 1995 second quarter reflects strength in the medical specialties segment of its business. International sales were up 4% to $691 million, and domestic sales were $1.8 billion, up 7%. These figures are exclusive of exchange rate effects and the divestiture of the diagnostics manufacturing businesses. "Our earnings growth, return on investment and cash flow during the past 18 months reflect successful implementation of our strategy," said Vernon Loucks, chairman and chief executive. "The second-quarter results continue this solid performance. Within our medical specialties segment (biotechnology, cardiovascular, renal and international hospital), each business achieved double-digit growth in sales and earnings," he said, adding "our US health care business played a significant role in leveraging the company's expense base, while aggressively moving its managed-care and alternate-site distribution initiatives."