Archive for Tuesday, June 24, 2003

Briefcase

June 24, 2003

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Biotech companies plan $6.4 billion merger

Biogen and IDEC Pharmaceuticals, two companies looking for cures for cancer and autoimmune disorders, announced plans Monday to merge in a $6.4 billion stock swap, the latest consolidation in the biotech industry.

The new company, to be headquartered in Cambridge, Mass., where Biogen is based, would be called Biogen IDEC Inc. and have more than 1,000 researchers, the companies said. Together, they had $1.55 billion in pro forma 2002 revenue, they said.

The deal would add 15 percent to cash earnings per share upon closing and result in $300 million in operating expense savings through 2007, the companies said.

Investigation

Merck subsidiary accused of deception

Federal prosecutors on Monday said a company that was supposed to help health plans find low-cost prescription drugs instead pressured doctors to switch patients to medications made by its owner, pharmaceutical giant Merck & Co.

U.S. Atty. Patrick Meehan said his office has joined a pair of civil "whistleblower" lawsuits against Medco Health Solutions, accusing the Merck subsidiary of providing misleading information to the government in connection with its contract to manage drug benefits for federal employees.

More than 1,000 companies have hired Medco to coordinate prescription drug coverage for employee health plans, making it the nation's largest manager of pharmacy benefits.

Retail

Walgreen predicts slowing sales growth

Walgreen Co. profits rose 14 percent in the third quarter but the company said slowing sales growth and rising store operating costs were squeezing its margins, sending its stock tumbling.

Walgreen's outcome was helped by rising prescription drug sales and a beneficial legal settlement. Prescriptions, which accounted for 63 percent of sales, jumped 15 percent.

The suburban Chicago-based chain said booming sales weren't enough to offset higher costs, particularly payroll, for its 4,050 Walgreens drugstores -- especially with the addition of more 24-hour stores. The company now has 1,049 stores that operate around the clock, more than 200 more than a year ago.

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