Drug Companies Report Healthy Gains

Speedy government approval of new drugs, rising demand from HMOs and stable or increasing prices are all helping the pharmaceutical industry post double-digit profit increases.

Of nine major U.S. drug makers that have reported fourth-quarter earnings this month, the average gain is 20%. Merck & Co., American Home Products Corp. and Warner-Lambert Co. all beat analyst predictions with their reports Tuesday.

Merck, based in Whitehouse Station, N.J., boosted net earnings 22% to $1.04 billion, or 87 cents per share, from the 1995 period. It had been expected to earn 85 cents a share.

Madison, N.J.-based American Home earned $511.6 million, or 80 cents per share, an increase of 29%, not including onetime charges and gains.

The per-share results exceeded the 78-cent average estimate of analysts.

Warner-Lambert, based in Morris Plains, N.J., said its quarterly net rose 39% to $171 million, or 63 cents per share. It had been expected to earn 61 cents a share.

Merck shares rose $2.50 to close at $87, American Home shares rose 50 cents to close at $60.25, and Warner-Lambert shares lost $1.375 to close at $72.25. All trade on the New York Stock Exchange.

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UAL Corp., the parent of United Airlines, said fourth-quarter profit rose 67% as more U.S. business passengers paid full fare and sales improved overseas, offsetting a 25% increase in fuel prices.

Chicago-based UAL said profit from operations rose to $142 million, or $1.06 a share, from $85 million, or 63 cents, in the year-earlier quarter.

Earnings topped Wall Street expectations of $1.02 a share.

Meanwhile, Phoenix-based America West Airlines Inc. said fourth-quarter profit fell a less-than-expected 5.5% as cost-cutting efforts helped offset higher fuel prices.

The airline said net income was $12.1 million, or 27 cents a share, compared with profit from operations of $12.8 million, also 27 cents, on fewer shares, a year earlier. The results beat expectations of 20 cents per share.

At a Glance:

Netscape Communications Corp.’s fourth-quarter earnings surged as more companies bought its software to use with corporate computer networks. Net income rose to $8.76 million, or 10 cents a share, from $511,000, or 1 cent, in the year-earlier quarter. The results matched Wall Street expectations.

RJR Nabisco Holdings Corp. said fourth-quarter earnings rose 20% as strong profit from its food business more than offset a decline in U.S. cigarette sales. The company said profit from operations rose to $248 million, or 72 cents a share, from $207 million, or 60 cents, a year ago.

GTE Corp. said earnings increased in the fourth quarter to $784 million, or 82 cents a share, contrasted with a loss of nearly $4 billion, or $4.09 a share, a year ago.

MCI Communications Corp. posted higher fourth-quarter profit of $303 million, or 44 cents a share, up from $284 million, or 41 cents, a year ago.

Procter & Gamble Co. said its second-quarter net income rose a better-than-expected 13% to $944 million, or $1.35 a share, from $836 million, or $1.18, in the year-earlier quarter.

3M reported fourth-quarter earnings of $385 million, or 92 cents a share, contrasted with a loss of $97 million, or 24 cents a share, a year ago.

Kimberly-Clark Corp. reported fourth-quarter profit of $347.1 million, or $1.23 per share, contrasted with an $841.7-million loss, or $3.01, a year earlier that stemmed from a charge for the company’s purchase of Scott Paper Co.