Exhibit 99.1
Contact:
Dennis J. O'Connor
Vice President, Chief Financial Officer
Pharmaceutical Resources, Inc.
(201) 802-4000
PHARMACEUTICAL RESOURCES REPORTS
SECOND-QUARTER SALES AND EARNINGS
SECOND-QUARTER TOTAL REVENUES GREW 14 PERCENT TO $115.9 MILLION;
BASE BUSINESS REVENUES ADVANCED 29 PERCENT TO $61.3 MILLION
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DILUTED EPS INCREASED 19 PERCENT TO $.74,
EXCLUDING ONE-TIME RETIREMENT COSTS
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GROSS MARGIN EXPANDED TO 53 PERCENT OF NET SALES IN QUARTER
SPRING VALLEY, NEW YORK, JULY 24, 2003 -- Pharmaceutical Resources, Inc.
(NYSE:PRX) today reported that total revenues increased 14 percent to $115.9
million for the second quarter ended June 29, 2003. For the quarter, the Company
achieved net income of $23.1 million and diluted earnings per share of $.68.
Excluding a one-time charge associated with a retirement agreement, net income
rose 24 percent to $25.3 million and diluted earnings per share increased 19
percent to $.74. This is compared with revenues of $101.8 million, net income of
$20.4 million and diluted earnings per share of $.62 for the same period a year
ago.
"The combination of our strong base business and a steady flow of new products
is continuing to drive our success," said Scott Tarriff, president and chief
executive officer of PRX's Par Pharmaceutical subsidiary. "The quarter benefited
from higher than anticipated sales of megestrol oral suspension, fluoxetine and
omeprazole as well as the introduction of three new products. This dynamic
combination enabled PRX to exceed consensus earnings estimates for the second
quarter."
In the second quarter, double-digit sales growth was again driven by the
Company's core products, or base business, which increased 29 percent to $61.3
million. The strong performance of the Company's base business resulted, in
part, from the second-quarter introductions of torsemide, the generic version of
Demadex(R), and minocycline, the generic form of Minocin(R). Base business
growth was also powered by several successful product launches in 2002,
including tizanidine, the generic version of Zanaflex(R).
Omeprazole, the generic version of Prilosec(R), also contributed significantly
to revenue growth in the second quarter, adding $7.1 million of royalty revenue.
In the fourth quarter of 2002, PRX began receiving royalty payments as a result
of KUDCo's launch of omeprazole. In the second quarter, megestrol oral
suspension, the generic form of Megace(R), achieved sales of $22.0 million while
sales of fluoxetine, the generic version of Prozac(R), totaled $24.6 million.
Although megestrol and fluoxetine continued to perform well, the robust sales
growth throughout PRX's base business and the launch of omeprazole effectively
reduced the Company's reliance on each of these key products.
For the second quarter, megestrol and fluoxetine represented approximately 40
percent of PRX's total revenues compared with 53 percent for the same period a
year ago. During the second quarter, PRX also began shipping generic paroxetine
hydrochloride immediate release tablets in the Commonwealth of Puerto Rico.
PRX's paroxetine hydrochloride tablets are substitutable for Paxil(R) and are
licensed from GlaxoSmithKline.
PRX's earnings growth in the second quarter benefited from continued improvement
in the Company's gross margin. Driven by royalty revenue from sales of
omeprazole, PRX's gross margin improved to 53 percent compared to 46 percent in
the second quarter of 2002. Investment in research and development (R&D)
increased 14 percent to $4.7 million in this year's second quarter.
"Sustaining growth for years to come remains our primary objective at PRX," said
Mr. Tarriff. "The key will be maintaining the strength and productivity of our
new product pipeline. This year, PRX will invest a record amount in research and
development. We now have 25 Abbreviated New Drug Applications (ANDA) awaiting
approval at the U.S. Food and Drug Administration (FDA). Going forward, it is
our goal to continue to invest heavily in R&D while maintaining our commitment
to earnings growth. We will continue to complement our internal R&D efforts by
aggressively pursuing promising business development opportunities like our
recently announced licensing agreement with Paddock Laboratories for
testosterone 1% gel (Androgel(R))."
Among the 25 drugs currently awaiting approval by the FDA, PRX believes that
several may represent first-to-file opportunities entitling the Company, or its
strategic partner, up to 180 days of marketing exclusivity or co-exclusivity.
These products include: olanzapine 20 mg (Zyprexa(R)); latanoprost (Xalatan(R));
ribavirin (Rebetol(R)); tramadol with acetaminophen (Ultracet(R)); and
testosterone 1% gel (Androgel(R)). It should be noted that it is difficult to
know with certainty that an ANDA filing has exclusivity, or shared exclusivity,
until final approval is received from the FDA.
For the six months ended June 30, 2003, total revenues advanced 22 percent to
$222.3 million, compared with $182.3 million for the same period in 2002.
Reported net income of $45.6 million and diluted earnings per share of $1.34
increased from $41.1 million and $1.25 per share in the first six months of
2002. The 2002 period includes a net benefit resulting from settlements with
Bristol-Myers Squibb and International Specialty Products. Excluding this net
benefit and the aforementioned one-time retirement charge, net income rose 25
percent to $47.8 million and diluted earnings per share increased 22 percent to
$1.41 for the first six months of 2003. This is compared with net income of
$38.2 million and diluted earnings per share of $1.16 for the first six months
of 2002, after excluding the net benefit of the two prior-year settlements.
For the first six months of 2003, PRX's gross margin improved to 52 percent
compared to 47 percent in the same period a year ago. This improvement reflected
sales of new, higher-value products, including royalty revenue resulting from
sales of omeprazole. Investment in R&D increased 60 percent to $11.1 million for
the first six months of this year. The substantial increase in R&D underscores
PRX's commitment to identify, formulate and develop a continuing stream of
promising new products.
In other product developments since the end of the first quarter of 2003:
o PRX's partner, Three Rivers Pharmaceuticals, was granted summary judgment
of non-infringement regarding its ribavirin product by the United States
District Court for the Central District of California. This decision
resolves the remaining patent barriers to FDA approval of the ANDA filed
by Three Rivers. PRX has exclusive marketing rights for the Three Rivers'
ribavirin product. Ribavirin is marketed by Schering-Plough under the
brand name Rebetol(R);
o PRX was issued two additional patents relating to megestrol oral
suspension. The patents collectively contain more than 70 additional
claims related to PRX's novel formulation of megestrol oral suspension.
PRX now holds four patents relating to this product. Based on these new
patents the Company filed suit against Roxane Labs claiming patent
infringement;
o PRX entered into a licensing agreement with developer Paddock Laboratories
to market its testosterone gel 1%, the generic version of Androgel(R). The
ANDA was recently accepted by the FDA and is believed to be the first ANDA
filed with a paragraph IV notification, potentially providing for 180 days
of exclusivity;
o PRX commenced shipment of torsemide tablets, the generic form of Roche's
Demadex(R). PRX developed and filed an ANDA for torsemide in conjunction
with Kali Laboratories and entered into a licensing agreement with Roche
to allow PRX to market torsemide; and
o PRX began shipment, in the Commonwealth of Puerto Rico, of generic
paroxetine hydrochloride immediate release tablets that are substitutable
for Paxil(R) and are licensed and supplied from GlaxoSmithKline. PRX will
be entitled to distribute the same product in the U.S. market once another
generic paroxetine hydrochloride immediate release tablet fully
substitutable for Paxil(R) becomes available there.
Pharmaceutical Resources, Inc., a holding company, develops, manufactures, and
distributes generic pharmaceuticals through its wholly owned subsidiary, Par
Pharmaceutical. Through its FineTech unit, PRX also develops and utilizes
synthetic chemical processes to design and develop intermediate ingredients used
in the production of finished products for the pharmaceutical industry. The
Company is also developing generic versions of controlled substance drugs with
SVC Pharma, a joint venture with Purdue Pharma's Rhodes Technologies unit. PRX
currently manufactures and distributes over 170 products representing various
dosage strengths of 63 drugs. For press release and other Company information,
visit http://www.parpharm.com
Certain statements in this press release constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. To
the extent any statements made in this news release contain information that is
not historical, these statements are essentially forward-looking and are subject
to risks and uncertainties, including the difficulty of predicting FDA filings
and approvals, acceptance and demand for new pharmaceutical products, the impact
of competitive products and pricing, new product development and launch,
reliance on key strategic alliances, uncertainty of patent litigation filed
against us, availability of raw materials, the regulatory environment,
fluctuations in operating results and other risks and uncertainties detailed
from time to time in the Company's filings with the Securities and Exchange
Commission, such as the Company's Form 10-K, Form 10-Q, and Form 8-K reports.
- chart follows -
PHARMACEUTICAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
SIX MONTHS ENDED THREE MONTHS ENDED
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JUNE 29, JUNE 30, JUNE 29, JUNE 30,
2003 2002 2003 2002
------------ ------------ ------------- ------------
Revenues:
Net product sales $209,485 $182,263 $108,801 $101,755
Other revenues 12,788 - 7,060 -
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Total revenues 222,273 182,263 115,861 101,755
Cost of goods sold 106,000 96,573 54,891 55,340
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Gross margin 116,273 85,690 60,970 46,415
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Operating expenses:
Research and development 11,120 6,937 4,651 4,063
Selling, general and administrative 30,105 16,363 18,215 8,847
Settlements - (9,051) - -
Acquistion termination charges - 4,278 - 10
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Total operating expenses 41,225 18,527 22,866 12,920
------------ ------------ ------------- ------------
Operating income 75,048 67,163 38,104 33,495
Other expense, net (44) (102) (10) (213)
Interest income, net 333 381 164 127
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Income before provision for income taxes 75,337 67,442 38,258 33,409
Provision for income taxes 29,758 26,302 15,112 13,029
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Net income $45,579 $41,140 $23,146 $20,380
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NET INCOME PER SHARE OF COMMON STOCK:
BASIC $1.38 $1.28 $0.70 $0.64
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DILUTED $1.34 $1.25 $0.68 $0.62
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
BASIC 33,021 32,069 33,153 32,089
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DILUTED 33,953 32,869 34,197 32,898
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COMPARATIVE ADJUSTED FOR ONE-TIME ITEMS
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Net income as reported above $45,579 $41,140 $23,146 $20,380
Retirement charges, net of tax 2,199 - 2,199 -
Settlements, net of tax - (5,521) - -
Acquisition termination charges, net of tax - 2,610 - 6
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ADJUSTED NET INCOME $47,778 $38,229 $25,345 $20,386
============ ============ ============= ============
ADJUSTED NET INCOME PER SHARE OF COMMON STOCK:
BASIC $1.45 $1.19 $0.76 $0.64
============ ============ ============= ============
DILUTED $1.41 $1.16 $0.74 $0.62
============ ============ ============= ============
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BALANCE SHEET HIGHLIGHTS
(Amounts in thousands)
JUNE 29, DEC. 31,
2003 2002
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Cash and cash equivalents $107,123 $65,121
Working capital, including cash and cash equivalents 191,489 136,305
Long-term debt, less current portion 1,445 2,426
Total shareholders' equity 286,482 220,790