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Pharma news in brief

Our weekly round-up of news affecting the industry.

Profits slip low for Pfizer, while outlook is gloomy

Pfizer has been hit by dented profits in the first quarter of 2005, stunted by generic competition and the controversy over its painkilling drugs, Bextra and Celebrex. The company posted profits of $301m for the first three months of the year, a drop of 87 per cent from $2.19bn for the same period last year, after incurring charges of $786m for Bextra, which has been withdrawn. Pfizer had been counting on the drug to strengthen earnings growth following the loss of patents. Further still, the company reduced its profit forecast for the year, predicting that earnings would fall by 7 per cent, to $1.98 per share compared to $2.12, following Bextra's withdrawal in the US.

HealthSouth's Scrushy may have to testify

Richard Scrushy, the former chief executive of HealthSouth, may take to the stand as the multi-billion dollar fraud trial heats up. The defence case opened last week in Birmingham, Alabama, following three months of prosecution evidence aimed at proving Scrushy was the mastermind behind the $2.7bn fraudulent activity. Five former chief financial officers (CFOs) pleaded guilty to fraud but received reduced sentences for testifying against Scrushy. His defence will claim that the CFOs kept the fraud secret then blamed Scrushy when the scam was discovered. Scrushy is the first chief executive charged under the Sarbanes-Oxley law, which increased penalties for executives guilty of fraud. However, he would only need to convince one juror to avoid conviction.

Big boost for Novartis

Novartis has reaffirmed its prediction of record profits for the year ahead, as first quarter profits increased by 16 per cent and market share rose, both due to the strong performance of its cancer drugs. Sales growth of 11 per cent to $7.34bn in the first quarter was in line with expectations and meant the company increased its share of the global healthcare market to 4.5 per cent compared to 4.4 per cent for the same period last year. The group's older cancer drugs, including Glivec and Femara, experienced strong underlying growth of 22 per cent. Net profits rose 16 per cent to $1.48bn, a faster rate than sales due to a one-off payment of $135m for the sale of its anti-hypertension drug, Cibacen.

Sandoz HQ to relocate

Sandoz, the generic drug-making subsidiary of Novartis, is relocating its headquarters to Munich, in one of Europe's highest-profile corporate moves of 2005. The company will take advantage of the tax rivalry between Austria, Switzerland and Germany, by moving out of Austria, to Germany, resulting in political lobbying by the three countries. The political pressure on Novartis reflects the competition in Europe for corporate headquarters.

Edmund Stoiber, prime minister of Bavaria, will hold a press conference today to discuss the matter. Although only 200 jobs may be affected, the move will be seen as a significant boost to Stoiber's attempts to build Bavaria as a central hub for high-tech industries such as biotech and pharmaceuticals.

UK biotech plans share flotation

Renovo, expected to be one of the biggest European biotech flotations, is planning to raise £50m to finance a potential blockbuster drug for the prevention of skin scarring following surgery, aimed at a $4bn (£2.1bn) US market. The UK biotech company, founded by two Manchester University researchers just five years ago, is developing a range of drugs that heal chronic wounds and prevent skin scarring by promoting tissue regeneration.

Renovo's R&D pipeline - four drugs in advanced clinical trials, another four ready to begin trials, plus a further 13 drugs - puts it among the top four biotech companies in Europe. Top management at the company includes former senior executives from Novartis and GlaxoSmithKline.

30th September 2008

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