IVAX Corporation
Thomas Beier, 305-575-6563
or
David Malina, 305-575-6043
IVAX Corporation (AMEX:IVX)(LSE:IVX.L) reported third quarter 2003 net
revenues of $360.6 million, compared to net revenues of $319.4 million
in the third quarter of 2002; net income of $21.6 million in the
quarter, compared to net income of $30.8 million in the third quarter
of 2002; and earnings per share of $.11, in the quarter, compared to
earnings per share of $.16 cents in the third quarter of 2002. For the
nine month period ended September 30, 2003, net revenues were $1.02
billion, and net income was $91.9 million or $.46 per share; compared
to net revenues of $872 million, and net income of $86 million, or
$.44 per share for the nine months ended September 30, 2002.
Neil Flanzraich, vice chairman and president of IVAX Corporation,
said, "IVAX Corporation has had strong revenue growth each quarter
this year. We were particularly pleased with the robust revenue growth
in the quarter in our North American operations and in our Latin
American operations. Our North American net revenues for the quarter
grew from $138.3 million to $172.3 million, an increase of 25%; and
our Latin American net revenues grew from $53.1 million to $68.8
million, an increase of 29%. The lower earnings in this quarter,
compared to the same quarter last year, are more than accounted for by
increased investments in both R&D and marketing and sales. During the
third quarter of 2003, we spent $11.8 million more on R&D and $10.5
million more on marketing and sales than in the third quarter of 2002.
These increased expenditures advanced our proprietary and generic
pipelines and grew our brand sales forces in Europe and the U.S. We
consider these very important and worthwhile investments and expect to
significantly benefit from them in the near future. For these reasons,
and others, we expect to meet or exceed the 2004 consensus estimate of
$.89. IVAX' confidence in the future performance of our business is
based on the following factors:
-- IVAX' U.S. Generics Business -- IVAX' extensive and growing
U.S. generic pipeline not only supports the above guidance,
but also provides large potential rewards beyond that
guidance. For example, if IVAX realized in 2004 the potential
of any of the following high profile generic opportunities,
our earnings would be propelled well beyond our present
guidance: IVAX' generic equivalent to Zyprexa(R), Eli Lilly's
antipsychotic drug which has annual U.S. sales of more than $3
billion (The trial of IVAX' patent challenge for this product
is scheduled for January 2004); IVAX' generic equivalent to
Neurontin(R), Pfizer's anti-seizure drug for epilepsy which
has annual U.S. sales of $2.2 billion, and Flonase(R),
GlaxoSmithKline's drug for rhinitis that has annual U.S. sales
of $875 million. IVAX continues its aggressive program of
manufacturing capacity expansion to support its growing U.S.
generic business. Also our recently acquired and upgraded
174,000 square foot chemical facility for the manufacture of
active pharmaceutical ingredients for generic products is
partially online and will soon be fully operational. Our
abundant generic opportunities, coupled with our growing
manufacturing capacity, leads us to expect that 4Q2003 and
2004 could be a period of significant growth and profitability
for our U.S. generics business.
Our U.S. generic pipeline consists of 38 Abbreviated New Drug
Applications (ANDAs) pending with the FDA, of which 9 are potential
"first to file" submissions with brand product annual U.S. sales of
over $13 billion. IVAX could launch, during the rest of 2003 and 2004,
up to 18 of these generic products of which 5 are potential "first to
file" submissions, relating to brand products having annual U.S. sales
of almost $6 billion. IVAX also expects to make 10 new ANDA
submissions by the end of 2003, 50 additional submissions in 2004; and
anticipates having up to 75 ANDAs pending with the FDA by the end of
2004. In the third quarter of 2003, IVAX' generic business was the
main contributor to our North American operations, where our revenues
increased by almost $34 million over the third quarter of 2002. Part
of that increase reflects increased revenues recognized as a result of
our recent return and customer inventory experience.
-- Metformin ER -- On October 28, 2003, IVAX received final
approval and confirmation of its "first to file" status for
Metformin ER. Metformin ER is the generic equivalent of
Glucophage XR(R), which is marketed by Bristol-Myers Squibb
for the treatment of type 2 diabetes and had annual sales of
over $453 million for the twelve months ending in June 2003.
As announced earlier today, another company on October 29,
2003 brought a legal action against the FDA, challenging the
FDA's award to IVAX of "first to file" status for the product.
The court granted a temporary restraining order against the
FDA pending a preliminary injunction hearing on November 12,
2003. The court did not rule on the merits of the case and
will consider the issues at the November 12th hearing. IVAX
has suspended further shipment of this product until the court
rules. IVAX will participate in these proceedings and support
the FDA position. IVAX expects a prompt decision by the court
and that its "first to file" status and final approval of
Metformin ER will be upheld; and that its sales of this
generic will make a significant contribution to IVAX' 4Q2003
and 2004 earnings.
-- IVAX' Branded U.S. Respiratory Products -- IVAX' U.S. branded
asthma product, QVAR(R) and its branded nasal spray for
allergies, Nasarel(R), have also made significant additions to
our North American operation's revenue growth. We expect
continued revenue growth from our U.S. brand respiratory
products. IVAX has two New Drug Applications (NDAs) for other
products pending with the FDA, one for CFC-free
(chlorofluorocarbon-free) albuterol in a metered dose inhaler
(MDI) and the other for CFC-free albuterol in IVAX'
EasiBreathe(R) breath-activated inhaler. One or both of these
products could be approved in 2004 and could be significant
contributors to IVAX' revenues and profits.
-- IVAX' Proprietary Pipeline -- Additionally, six of the drugs
in IVAX' proprietary pipeline have recently moved on to more
advanced phases of clinical development. One of these drugs
could be launched during 2004. IVAX may also enter into new
collaborations with other pharmaceutical companies that may
result in significant upfront and milestone payments, even
before the products reach market, and later in royalty
payments. Such collaborations would also help us reduce our
R&D expenditures.
-- Europe and 3M -- In Europe, pricing pressures and currency
issues have limited our revenue growth, but we expect the
recently completed transaction with the 3M Company (NYS:MMM),
giving IVAX exclusive rights to branded asthma products
together with related marketing and sales personnel in nine
European countries, to improve revenue growth and margins. In
Germany, the third largest pharmaceutical market, where IVAX
has had no direct pharmaceutical marketing and sales activity,
we now have branded products which have a strong market share.
In France, the fourth largest pharmaceutical market, we
established our business in 2002 and have incurred start-up
losses which impacted our earnings in 2003. The products
coming from the 3M transaction are expected to create the
critical mass needed for profitability. In the U.K., where
IVAX is the third largest respiratory products company, the
acquired products will further improve our market position.
IVAX is confident it can replicate in the 9 European
countries, for which it has acquired rights to QVAR, the
success that it has achieved with this product in the U.S. The
financial benefits of the added products and our investment in
an enlarged sales force have already begun.
-- Europe and Paclitaxel -- IVAX believes it will be the first
company to sell a second brand of injectible paclitaxel in
Europe for cancer therapy, well before other similar products
are launched. This represents a significant opportunity for
IVAX as the annual European market for paclitaxel is presently
approximately $400-$600 million with margins that are
considerably higher than in the U.S.
-- Latin America -- Our Latin American revenues were up 29% over
the same period last year, building substantially on the
growth achieved in the second quarter of 2003. We expect our
business in Latin America to continue to generate increased
revenues and profits.
For the above reasons, we expect to meet or exceed the 2004 consensus
estimate of $.89."
IVAX will host a conference call and simultaneous webcast at 10 a.m.
Eastern (Miami) Time today to discuss third quarter results and other
topics. Interested parties can access the conference call by dialing
1-888-577-0767 from anywhere in the U.S. or by dialing 303-242-0015
from non-U.S. locations. To register and access the webcast, go to
IVAX' website at http://www.ivax.com at least fifteen minutes before
the 10 a.m. conference call. Click on the website link on the IVAX
home page to register and download or install any necessary software.
Replays of the conference call will be available starting at
approximately 1:30 p.m. on October 30th and will continue through
November 6th. To listen to the replay, dial 1-800-475-6701 and enter
ID #703932. Replays of the webcast via IVAX' website will be available
from October 30th through November 6th.
IVAX Corporation, headquartered in Miami, Florida, discovers,
develops, manufactures, and markets branded and brand equivalent
(generic) pharmaceuticals and veterinary products in the U.S. and
internationally.
Copies of this and other news releases may be obtained free of charge
from IVAX' website at www.ivax.com.
Except for the historical matters contained herein, statements in this
press release are forward-looking and are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995, regarding, among other things, statements relating to goals,
plans, expectations and estimates regarding the company's financial
position, results of operations, market position, product development
and business strategy. Investors are cautioned that forward-looking
statements involve risks and uncertainties that cannot be predicted or
quantified and, consequentially, actual results may differ materially
from those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, among others, the risks that
IVAX' earnings in 2004 may not meet or exceed the current consensus
estimate; that the next 15 months will not be a period of significant
growth and profitability for our U.S. generic business; that increased
expenditures may not increase our future revenues and profits; that
our API facility may not be fully operational as soon as anticipated;
that IVAX may not be the first to file on 9, or any, of its pending
ANDAs; that IVAX may not receive approval of its pending ANDAs, or
that if approved, the products will not be successfully
commercialized; that IVAX may not receive approvals for, or launch, 18
generic drugs in the next 15 months; that IVAX may not file the
anticipated ANDAs or any additional ANDAs within the expected time
periods; that budgetary and other capital constraints could impact the
number of products under development and the number and timing of
ANDAs to be filed; that the compounds and products in IVAX' pipeline
will not be successfully developed, will not receive regulatory
approval or will not be successfully commercialized; that our efforts
to increase our manufacturing capacity may not be successful, which
could impede our future growth; the difficulty in predicting the
timing and outcome of legal proceedings, including those relating to
patent challenge settlements and patent infringement cases; the impact
of the FDA's or other administrative or judicial agency's decisions on
exclusivity periods; the difficulty of predicting the timing of U.S.
Food and Drug Administration, or FDA, approvals; competitors'
abilities to extend exclusivity periods past initial patent terms;
that sales of metformin ER may be impacted during the exclusivity
period by licensing arrangements between Bristol-Myers and third party
competitors; that exclusivity periods and the launch of metformin ER
may be challenged by third parties, including challenges regarding
patent infringement and that these challenges, if successful, could
result in revocation or suspension of IVAX' approval to market
metformin ER; that IVAX may not receive approval of its pending NDAs,
or that if approved, the products will not be successfully
commercialized; that IVAX may not file any additional NDAs; that
clinical trials and studies for products and compounds under
development may not be commenced, may take longer than anticipated,
may fail, may not achieve the expected results or effectiveness and
may not generate the data that would support the approval or marketing
of these products for the indications being stated or for other
indications; that IVAX may not enter into new product collaboration
and license agreements and receive upfront, milestone or royalty
payments or reduce costs; that the transaction with 3M may not improve
IVAX' revenue growth or margins, and may not improve IVAX' market
position or profitability; that IVAX' operations in France may not
achieve profitability when expected if at all; that IVAX' sales of
QVAR will not continue to grow and may decrease; that IVAX may not
receive approval for, or launch, its paclitaxel product in Europe;
that IVAX has in the past and may in the future experience
difficulties in obtaining raw materials and other components necessary
for the production of our products, particularly paclitaxel, on
commercially reasonable terms or at all; that political and economic
instability in some countries in which we conduct our business,
particularly Latin American countries, may adversely affect the
revenue our foreign operations generate; changing market conditions;
the impact of competitive products and pricing; and that our
businesses and sales and profitability may not grow as anticipated or
at all. In addition to the risk factors set forth above, IVAX' forward
looking statements may also be adversely affected by general market
factors, competitive product development, product availability,
current and future branded and generic competition for the company's
products, federal and state regulations and legislation, the
regulatory process for new products and indications, manufacturing
issues that may arise, trade buying patterns, exchange rate
fluctuations, patent positions and the timing and outcome of legal
proceedings, among other things. For further details and discussion of
these and other risks and uncertainties, see IVAX' Annual Report on
Form 10-K and other filings with the Securities and Exchange
Commission. IVAX undertakes no obligation to publicly update any
forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.
IVAX Corporation and Subsidiaries
Condensed Consolidated Statements of
Operations
(Unaudited)
Three Months Nine Months
Period Ended September 30, 2003 2002 2003 2002
------------------- ---------------------
(In thousands, except per
share data)
Net revenues (1) $360,638 $319,394 $1,021,316 $872,021
Cost of sales (1) 200,102 176,592 563,685 476,682
------------------- ---------------------
Gross profit 160,536 142,802 457,631 395,339
------------------- ---------------------
Operating expenses:
Selling 51,128 40,593 149,181 126,516
General and
administrative 34,902 30,952 91,249 85,511
Research and development 29,973 18,220 75,459 55,603
Amortization of
intangible assets 4,611 3,855 14,417 10,787
Restructuring costs 18 879 798 3,161
------------------- ---------------------
Total operating
expenses 120,632 94,499 331,104 281,578
------------------- ---------------------
Income from operations 39,904 48,303 126,527 113,761
Total other (expense)
income, net (5,568) (3,447) (19,747) 1,632
------------------- ---------------------
Income before income taxes
and minority interest 34,336 44,856 106,780 115,393
Provision for income taxes 12,756 14,503 37,240 34,081
------------------- ---------------------
Income before minority
interest 21,580 30,353 69,540 81,312
Minority interest 51 450 162 512
------------------- ---------------------
Income from continuing
operations 21,631 30,803 69,702 81,824
Income from discontinued
operations, net of tax of
$12,763 - - 22,204 -
Cumulative effect of
accounting change - - - 4,161
------------------- ---------------------
Net income (1) $ 21,631 $ 30,803 $ 91,906 $ 85,985
=================== =====================
Basic earnings per common
share:
Continuing operations $ 0.11 $ 0.16 $ 0.36 $ 0.42
Discontinued operations - - 0.11 -
Cumulative effect of
accounting change - - - 0.02
------------------- ---------------------
Net income (1) $ 0.11 $ 0.16 $ 0.47 $ 0.44
=================== =====================
Diluted earnings per common
share:
Continuing operations $ 0.11 $ 0.16 $ 0.35 $ 0.42
Discontinued operations - - 0.11 -
Cumulative effect of
accounting change - - - 0.02
--------- --------- ----------- ---------
Net income (1) $ 0.11 $ 0.16 $ 0.46 $ 0.44
=================== =====================
Weighted average number of
common shares outstanding:
Basic 195,467 194,604 195,200 195,292
=================== =====================
Diluted 199,550 196,452 198,236 197,501
=================== =====================
IVAX Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, December 31,
2003 2002
------------- ------------
(In thousands) (Unaudited)
Assets
------
Cash and cash equivalents $ 187,546 $ 155,408
Marketable securities, short-term 9,874 28,873
Other current assets 739,057 696,936
Property, plant and equipment, net 463,387 420,246
Other assets 792,237 746,296
------------- ------------
Total assets $ 2,192,101 $ 2,047,759
============= ============
Liabilities and Shareholders' Equity
------------------------------------
Current portion of long-term debt $ 35,723 $ 28,617
Other current liabilities 406,110 405,446
Long-term debt 829,830 872,339
Other long-term liabilities 59,123 46,115
Minority interest 12,259 10,379
Shareholders' equity 849,056 684,863
------------- ------------
Total liabilities and shareholders'
equity $ 2,192,101 $ 2,047,759
============= ============
Note (1). As a result of our recent return and customer inventory
experience, our estimates of product returns and other sales
allowances and inventory obsolescence decreased and, accordingly, we
recognized increased net revenues and reduced cost of sales during the
quarter. During the 3 months ended September 30, 2003, these changes
increased net revenues by $10.2 million, reduced cost of sales by $2.5
million, increased net income by $7.9 million and increased diluted
earnings per share by $.04.
IVAX Corporation and Subsidiaries
Reportable Segment Data
(Unaudited)
Period Ended September 30, Three Months Nine Months
In Thousands 2003 2002 2003 2002
North America
External sales $167,418 $131,369 $ 456,217 $345,876
Intersegment sales 27 153 489 705
Other revenues 4,858 6,801 21,938 21,661
------------------- ---------------------
Net revenues -
North America 172,303 138,323 478,644 368,242
------------------- ---------------------
Europe
External sales 100,586 98,188 299,396 264,377
Intersegment sales 19,090 6,646 47,031 36,551
Other revenues 4,363 18,163 22,005 35,354
------------------- ---------------------
Net revenues - Europe 124,039 122,997 368,432 336,282
------------------- ---------------------
Latin America
External sales 68,633 52,859 179,714 169,362
Other revenues 142 274 401 1,104
------------------- ---------------------
Net revenues -
Latin America 68,775 53,133 180,115 170,466
------------------- ---------------------
Corporate & other
External sales 14,199 12,085 39,014 32,292
Intersegment sales (19,117) (6,799) (47,520) (37,256)
Other revenues 439 (345) 2,631 1,995
------------------- ---------------------
Net revenues -
Corporate & other (4,479) 4,941 (5,875) (2,969)
------------------- ---------------------
------------------- ---------------------
Consolidated net revenues $360,638 $319,394 $1,021,316 $872,021
=================== =====================
