Drug recall hits Wyeth profits

US pharmaceutical giant Wyeth reported a quarterly loss for the three months to the end of December due to a $4.5 billion (€3.45 billion) charge for its recalled "fen-phen" diet drugs and warned of disappointing profit for 2005, sending its shares down more than 7 per cent.

Wyeth's total charges for fen-phen have now crossed the $21 billion mark since the company recalled its Pondimin and Redux drugs in 1997 after they were linked to heart valve damage and a fatal lung condition.

The drugmaker, which employs around 3,000 people in Ireland, lost $1.76 billion, or $1.32 per share, in the fourth quarter. That compares with a year-earlier profit of $335 million, or 25 cents per share, after big charges for restructuring its manufacturing operations and other actions.

Excluding special items, Wyeth said quarterly profit rose to 64 US cents per share from 60 cents. Analysts on average expected 67 cents.

Wyeth forecast 2005 earnings of $2.70-$2.80 per share, excluding taxes from any overseas profits it may decide to repatriate to the United States under the American Jobs Creation Act.

That is well below the $2.89 per share expected by Wall Street, due largely to higher-than-expected increases in research spending this year and higher initial costs of making the company's Enbrel arthritis drug at two new plants.

"We expect to spend about $100 million more this year on research than many industry analysts had expected, and that will cause a short-term hit to our earnings," chief financial officer Mr Kenneth Martin said in an interview.

But Mr Martin said the boost in research spending, to a total of $2.7 billion, is warranted because it will enable Wyeth to complete work on a number of experimental drugs and submit them for regulatory approval in the next 18 months.

The company had warned in October it might need to set aside additional reserves to cover liability to former users of its diet drugs, including tens of thousands who have filed lawsuits alleging they were harmed by the products and not adequately warned of their dangers.

Quarterly revenue rose 7 per cent to $4.6 billion, matching Wall Street estimates, on surging sales of the Prevnar vaccine against childhood pneumococcal infections. Revenue would have risen only 5 per cent if not for the weak dollar, which raises the value of overseas sales when converted back into US currency.

Wyeth said revenue should increase 5-9 per cent this year, fuelled by continued growth of Prevnar, ulcer drug Protonix and antibiotic Zosyn. - (Reuters)