Warner-Lambert shares fall 18% after 5 diabetes drug deaths Sales halted in Britain, continue in United States

Pharmaceuticals

December 02, 1997|By BLOOMBERG NEWS

MORRIS PLAINS, N.J. -- Warner-Lambert Co. shares fell 18 percent yesterday after Glaxo Wellcome PLC halted British sales of a new diabetes drug that Warner-Lambert sells in the United States because at least five people died from toxic side effects.

Warner-Lambert Co. fell $25.875 to $114 in trading of 9.99 million shares. The stock was the second most-active in terms of market value, losing $1.5 billion, and the 10th-biggest percentage decliner on U.S. markets. Earlier, shares touched $112, their lowest point in five months.

Warner-Lambert will continue to sell the drug, troglitazone, in the United States, but -- for a second time -- it will strengthen its warning about potential liver damage.

Investors and analysts have been counting on sales of the drug, sold as Rezulin in the United States, along with sales from the cholesterol-lowering drug Lipitor, to drive Warner-Lambert's growth.

"Doctors will be more selective about which patients should get the drug; that means they'll prescribe less of it," said Cynthia Beach, an analyst with Gerard Klauer Mattison & Co.

Japan's Sankyo Co. developed troglitazone, which makes the body more sensitive to the naturally occurring hormone insulin, and licensed it to Warner-Lambert in the U.S. and Glaxo in the United Kingdom, where it's been sold since October.

"This is a serious problem for the business of both Warner-Lambert and Sankyo," said Samuel D. Isaly, an analyst at Mehta & Isaly in New York, who suspended his "buy" rating on the stock. "The drug had a very rapid take off and looked like it could hit $1 billion in sales in the United States, Europe and Japan."

Analysts at Merrill Lynch & Co., Rodman & Renshaw, Schroder & Co., BT Alex. Brown and Morgan Stanley Dean Witter & Discover Co. also downgraded their ratings on Warner-Lambert yesterday.

The drug is used to treat Type II diabetes, by far the most common form, in which patients don't produce enough insulin to properly process blood sugar into energy. The disease, which typically strikes during middle age, often is brought on by health problems such as obesity. Diabetes can cause blindness, kidney and heart disease.

Pub Date: 12/02/97

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