Chesapeake Labs loses business Allergan won't renew deal to buy Vitrax

April 13, 1996|By Mark Guidera | Mark Guidera,SUN STAFF

Allergan Inc., a California-based medical products company, said yesterday it won't renew a production contract with Owings Mills-based Chesapeake Biological Laboratories for a surgical eye lubricant.

The contract provided Chesapeake, a manufacturer for the bio-pharmaceutical industry, with between $2 million and $3.5 million annually in sales, depending on demand, said Jack Janssen, Chesapeake's chief financial officer. Chesapeake reported net earnings of $252,000 on $4.7 million in revenues during the first nine months of its fiscalyear.

Production of the lubricant, which is sold for cataract and eye surgery and is called Vitrax, has accounted for between 25 percent and 40 percent of s revenues during the past three years, said Mr. Janssen.

He said Allergan's decision did not come as a surprise, and said Chesapeake Biological has been negotiating with other companies to replace Allergan's business.

"It's a good business, and we were happy to have it," said Mr. Janssen.

Publicly held Allergan, which had 1995 earnings of $72 million on revenues of about $1.1 billion, did not renew the contract because it wants to produce Vitrax at a manufacturing plant it owns in Ireland, said Jeffrey D'Eliscu, a spokesman for Allergan. The Irvine, Calif.-based company is seeking Food and Drug Administration approval for that plan.

William P. Tew, chief executive officer at Chesapeake Biological, said the company expects to phase out production of Vitrax at the company's facility in the Seton Industrial Park in Baltimore by February 1997. The company would continue to manufacture the eye lubricant longer, though, if Allergan needs more time to get production of Vitrax started at its Irish facility, he said.

Pub Date: 4/13/96

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