Nycomed shares plunge on profit warning

Shares of Norwegian contrast agent manufacturer Nycomed plunged23% on the Oslo stock exchange last week after the company warnedthe investment community that it expected lower profits this year,according to the Financial Times of London. Nycomed said strongcompetition in the U.S. x-ray contrast agent market had createdpricing pressure that will affect Nycomed's profits.

Nycomed's first-quarter results, released in May, indicated adrop in operating profit from NOK607 million ($93.1 million) toNOK553 million ($84.8 million). Pricing pressures have worsenedsince then, Nycomed said, and profits for the year will drop to1994 levels. The Financial Times said the decline in profits hasrenewed rumors that Nycomed is a takeover candidate.

Much of the contrast agent pricing pressure that is troublingNycomed is due to market-share battles in the U.S. as the majorcontrast players prepare for the introduction of generic versionsof Bracco's iopamidol (SCAN Special Report 5/96). The FinancialTimes article said that Nycomed's competitors have been slashingprices by 40% to 50%, and that Nycomed was unprepared for thepricing battles because of corporate management's attention toother matters, such as the aborted merger with Ivax and the demergerof Nycomed's energy business (SCAN 12/13/95 and 5/22/96).

Nycomed's market-share woes may have been compounded when majorcustomer American Healthcare Services switched from the company'sOmnipaque agent to Mallinckrodt Medical's Optiray after joiningthe Premier buying group.