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Alpharma cautious FY07 outlook on falling EPS

Alpharma posts its Q2 FY07 financial results, revealing a diluted EPS of USD 0.30, compared with USD 0.32 in the Q2 FY06

Alpharma, a US-based specialty pharmaceutical company, has posted its Q2 FY07 financial results, revealing a diluted EPS of USD 0.30, compared with USD 0.32 in the Q2 FY06.

Revenue increased 12.7 per cent helped by strong performance by Alpharmaís three businesses. Operating income was USD 17.0m, a fall of USD 6.3m, compared with Q2 FY06 and reflected a USD 11.7m increase in R&D spending to shore up the company's abuse-deterrent pain product platform in its Pharmaceuticals unit.

Operating income decreased USD 8.4m to USD 3.1m in Q2 FY07, compared with operating income of USD 11.5m in Q2 FY06, as a result of increased R&D and SG&A spending. SG&A expenses increased USD 4.4m.

Active pharmaceutical ingredient (API) Q2 revenues increased 16 per cent to reach USD 46.3m, compared with USD 39.8m in Q2 FY06. Excluding currency effects, revenues increased 15 per cent on 2006 levels, driven by increased volumes of vancomycin.

Sales of chronic pain therapy Kadian (morphine extended-release capsules) increased 17 per cent to reach USD 42.6m in Q2 FY07, compared with USD 36.3m in Q2 FY06, due to increased volume, favourable pricing and the launch of the 200mg line extension. Prescriptions for the drug increased seven per cent on Q2 FY06.

The Kadian gains were tempered by reported prescription data in 2006, which included prescriptions related to the company's discontinued voucher programme. Excluding 2006 voucher-related prescriptions, Q2 FY07 Kadian prescriptions grew 11 per cent. Wholesaler inventory levels were below 1.5 months by the end of Q2 FY07.

Alpharma expects its 2007 EPS to be at the lower end of its outlook range of USD 1.25 to USD 1.45. The outlook excludes future business development transactions.

1st August 2007

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