|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | |
OCTOBER 9, 2003
By Diane Brady What's Really Banging Up Biovail? The Canadian drugmaker says a truck accident caused it to lower guidance. Wall Street skeptics think something more may be going on For Biovail Corp., a fatal traffic accident on Oct. 1 involving a truck carrying its product was one more piece of bad news. After two quarters of producing disappointing earnings -- and fending off questions raised by accounting experts about the quality of its earnings -- the Canadian drugmaker held a conference call with analysts and investors on Oct. 3, saying it would have to lower revenue expectations by up to 22% for the third quarter. Instead of booking $260 million to $300 million in revenue for the period, the range would likely be between $215 million and $235 million. "Contributing significantly to this unfavorable variance," Biovail (BVF ) said, was the traffic accident. According to the Mississauga (Ont.)-based company, the truck incident might take a huge chunk out of sales of its new antidepressant Wellbutrin XL -- not just for the quarter, but for the whole year. Although the product in the truck might not be damaged, Ken Howling, Biovail's vice-president for finance, said it would have to be inspected to be sure. That is, of course, the prudent thing to do. Analysts, however, are raising questions about why Biovail would have to lower estimated sales for the fourth quarter, too. Investors fled the stock at the warning, lopping more than a third off the price since Biovail's Oct. 3 conference call (as of Oct. 7, it was trading around $25). "MINOR PLAYER." In the Oct. 1 accident, a truck carrying some of Biovail's Wellbutrin XL drug was involved in a multivehicle pileup outside Chicago. Eight people died, but the truck in question escaped largely intact, says Illinois state trooper Doug Whitmore. He tells BusinessWeek Online that the vehicle carrying Biovail's pills was an "extremely minor player in the accident" -- with about $10,000 damage to the trailer and no product spilled on the ground. "They got rear-ended," Whitmore says. Yet, two days after the accident, Biovail said the damage could cut $15 million to $20 million off third-quarter sales, which are set to be reported later in October. Without the revenue from that truckload, which was set to be booked in the third quarter, sales of Wellbutrin XL are expected to come in at less than $10 million for the quarter, according to Biovail. And because of the collision, the company reduced projected sales of the new once-daily antidepressant for the rest of the year. That's a heavy hit from one accident. Biovail's Howling says the drugmaker, with $800 million a year in sales, is just being careful. On Oct. 8, the company said about 60% of the Wellbutrin XL shipment is salable and may be reshipped within the next 30 days. But it continues to be unclear about the exact value of the contents and says further testing at its Manitoba facility is required. And the explanation of the initial crisis still raises some questions for analysts. SUPPLY-CHAIN ISSUES? Investors might be wondering whether revenues from Biovail's star drug were living up to expectations before the truck accident. Howling says sales of Wellbutrin XL, which got Food & Drug Administration approval on Aug. 28, are on track. So why the rush to downgrade expectations for the rest of the year when Biovail has said it has ample production capacity to meet demand, and the tablets on the damaged truck might turn out to be suitable for sale? Howling reiterates that the company is simply being conservative until the damage is fully assessed. The accident could affect the amount of product available for shipping in the fourth quarter, he notes, presumably because of supply chain or other issues. But the folks at GlaxoSmithKline (GSK ), which distributes the drug to doctors and pharmacies, don't seem to be worried. "It has not caused any problems with stocking or supplying on our end," says GlaxoSmithKline spokeswoman Mary Anne Rhyne. "I think the pipeline was pretty full."
BW MALL
SPONSORED LINKS
Buy a link now! | | |
 Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Policy |
Printer-Friendly Version
