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Barr Pharmaceuticals Profit Down, but Beats Street

Reuters
Wednesday, 8 Aug 2007 | 12:27 PM ET

Barr Pharmaceuticals said Wednesday quarterly earnings fell sharply, hurt by costs tied to an acquisition, but its operating profit beat Wall Street estimates as generic drug sales soared.

Barr shares rose 4.69 percent in Wednesday early-afternoon trade, gaining $2.48 at $55.31 on the New York Stock Exchange.

Net income fell to $45.3 million, or 41 cents per share, from $82.3 million, or 76 cents per share, a year earlier.

The Woodcliff Lake, N.J.-based company reported adjusted earnings per share of 84 cents, excluding amortization costs related to its acquisition of drugmaker Pliva and other items.

Including 5 cents of stock-options expense, Barr's adjusted earnings of 79 cents beat analysts' average estimate of 72 cents, according to Reuters Estimates.

The earnings surprise stemmed largely from strong generic drug sales, including those of its oral contraceptives, according to analysts at CIBC.

Barr's second-quarter "results should satisfy even its greatest skeptics," CIBC analyst Elliot Wilbur wrote in a research note.

Barr's $2.5 billion acquisition of Croatia's Pliva transformed it into one of the largest generic drugmakers with sales in markets around the world.

Second-quarter revenue soared 81 percent to $637 million, compared with a year earlier, before the company completed its Pliva deal in October.

Sales of Barr's generic drugs more than doubled to $487 million, including $191 million in sales from Europe and the rest of the world through its Pliva subsidiary.

Sales of generic oral contraceptives, the company's largest single category of generic products, rose 8 percent to $116 million.

Barr repeated its expectation of full-year adjusted earnings per share of about $3 to $3.30. It expects 2007 revenue of $2.4 billion to $2.5 billion.

Barr said last week that its chief operating officer, Paul Bisaro, was leaving to become CEO of rival generic drugmaker Watson Pharmaceuticals .

Analysts have been worried about the impact of Bisaro's departure on the integration of Pliva, but Barr Chief Executive Officer Bruce Downey said on a call with analysts that he was confident the integration would proceed on schedule.

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