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[IP] For Propulsid-takers
March 24, 2000
Johnson & Johnson Tumbles After Drug Pulled
By MICHAEL BRICK
NYTimes.com/TheStreet.com, 11:30 a.m.
Johnson & Johnson shares fell sharply Friday after the company withdrew from
the market a drug under scrutiny by the Food and Drug Administration.
The shares tumbled 6 15/16, or 9 percent, to 73 1/16 in midday trading as
Wall Street analysts slightly lowered their earnings estimates.
Titusville, N.J.-based Jannsen Pharmaceutica, a unit of Johnson & Johnson
that sells the heartburn medication cisapride under the name Propulsid, said
it will stop marketing the drug and distribute it only to patients who have
not been helped by other treatments.
The FDA approved Propulsid for heartburn treatment in 1993, but the agency
began receiving reports of patients dying by the next year. The agency, which
has received reports of 80 deaths related to the medication, had scheduled an
April 12 meeting to discuss proposals to ban or seriously restrict the drug's
Though several Wall Street analysts lowered their ratings on the stocks and
predicted sizeable reductions in revenue, most expected little change in the
company's overall earnings.
"This is news that we've been discussing for months," said Frederick Wise,
analyst for Bear Stearns. "Many feared that the drug would be taken off the
market completely. It has not." Wise rates the stock a buy, and his firm has
not done underwriting for Johnson & Johnson.
The company will still sell the drug until mid-July; then doctors will be
required to document that other drugs have failed before prescribing
Sales of the drug totaled around $950 million in 1999, and the company had
previously told analysts it now expects to make around $250 million to $300
million in worldwide sales this year. Analysts predict total annual revenues
of around $30 billion for the company this year.
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