Focus ’98 restructuring charge hurts Nycomed’s year-end results

Company says ultrasound agent is top R&D priority

Ongoing price pressures in the contrast media industry and a majorrestructuring charge contributed to lower operating revenues andincome in 1996 for Norwegian pharmaceutical developer Nycomed.Shares of the Oslo company rose after release of the year-endresults, however, as investors approved of its plan to cut costs.

For the year, Nycomed reported operating revenue of $1.16 billion(7.74 billion Norwegian kroner), down 8% or $100 million comparedwith $1.26 billion in operating revenues in 1995. About $30 millionof the decline was due to lower activity in contract production,as well as the sale of Nycomed's cosmetics business in May 1995.Otherwise, Nycomed said the main reason for the decline was pressureon contrast media prices in North America.

On the profit side, Nycomed reported preliminary income forthe year (before taxes and excluding Focus '98 restructuring costsin 1996) of $175.1 million, down 30% compared with $253.7 millionin 1995. Net income was $15.6 million (including restructuringcosts), compared with net income of $167.6 million in 1995.

Much of the big drop in net income was due to a restructuringcharge of $120.2 million in the fourth quarter of 1996. The chargecovers implementation of Nycomed's Focus '98 program, an effortto return to profit growth by cutting costs (SCAN 11/20/96). Thecompany expects cost savings of $90.2 million a year startingin 1998 once Focus '98 is implemented completely.

Outside North America, Nycomed reported that sales of its Omnipaque,Visipaque, and Imagopaque x-ray contrast agents increased 10%in 1996. The company said sales of its newer Visipaque dimericcontrast medium were going well, with Visipaque sales making up10% of Nycomed's x-ray contrast revenue in the U.S. MRI contrastmedium Omniscan enjoyed strong growth in Europe, although salesgrowth leveled off in the U.S. due to pricing pressure.

In the R&D area, Nycomed said that the development of itsNC100100 ultrasound contrast agent is its top R&D project.The company hopes that NC100100 will enable a simpler diagnosisof heart and liver ailments. Phase II clinical trials are underway in Europe for heart studies and in the U.S. for visualizingliver lesions.

MRI agents in the R&D pipeline include NC100150, a generalintravascular contrast medium in preclinical development, whileTeslascan, an agent for the liver and pancreas, is expected toreceive U.S. approval in the first half of 1997.