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ORANGE COUNTY EARNINGS

Pharmaceutical Sales Boost Bergen Brunswig Profits 20%

April 22, 1998|(Times Wire Services)

Bergen Brunswig Corp. said fiscal second-quarter profit rose 20% as the drug and medical supplies distributor added new customers and broadened its relationships with others.

The Orange-based company said profit before a charge rose to $28.6 million, or 56 cents a share, in the period ended March 31, from $23.9 million, or 47 cents, a year earlier. Revenue rose 17% to $3.37 billion from $2.89 billion. The earnings results were in line with expectations.

Bergen and other drug distributors are benefiting from an increase in pharmaceutical sales fueled by the introduction of powerful medications and a move by health insurers to treat patients with drugs before trying more expensive alternatives such as surgery.

"As you see more drugs being prescribed, it's all flowing to the distributors," said Jeffrey Kraws, an analyst with Everen Securities Inc. who has a "strong buy" recommendation on the stock. "And they're increasing efficiencies, which is giving them higher operating profit."

Bergen reported the results as U.S. regulators try to block it from being acquired by Cardinal Health Inc. The Federal Trade Commission says that acquisition, along with McKesson Corp.'s plan to buy AmeriSource Health Corp., violate antitrust laws and will push up drug prices.

Should the $4.16-billion acquisition fail, Bergen's earnings still will grow at least 20% a year for the next three to five years, Kraws said.

"If the acquisition happens, that's icing on cake," he said. "They're going about their business as if nothing is taking place."

Bergen took a pretax charge of $9.8 million, or 19 cents a share, in the fiscal second quarter, related to its acquisition by Cardinal, including litigation with federal regulators. It took an after-tax charge of $3.4 million, or 6 cents a share, in the year-earlier period, related to its failed acquisition of generic drug maker Ivax Corp.

For the six months, the company posted net income of $40.1 million, or 78 cents a share, up 3.6% from $38.7 million, or 77 cents a share, a year earlier. Sales rose 14% to $6.5 billion from $5.7 billion.

Bergen shares fell 63 cents to $46.25 on the New York Stock Exchange.

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