WASHINGTON (dpa-AFX) - Forest Laboratories Inc. (FRX) on Monday lowered its earnings outlook for fiscal 2013, citing 'evolving and unanticipated conditions' in the Lexapro/escitalopram market after the drug maker lost patent protection for its anti-depressant drug Lexapro in March this year.
New York-based Forest Laboratories lowered its forecasts for both branded Lexapro sales and royalty income earned on sales of the escitalopram authorized generic, distributed by an independent third party. The combined impact is a reduction in projected fiscal 2013 earnings of about $0.25 per share.
Accordingly, Forest Laboratories now expects fiscal 2013 earnings per share in a range of $0.65 to $0.80 per share and adjusted earnings per share of $0.95 to $1.10. Earlier, the company forecast earnings per share for the year in a range of $0.90 to $1.05 and adjusted earnings per share of $1.20 to $1.35.
On average, 28 analysts polled by Thomson Reuters expect the company to earn $0.98 per share for the year. Analysts' estimates typically exclude special items.
The company now projects royalty income earned on sales of its authorized generic version of Lexapro to be $60 million, down from the prior forecast of $115 million.
Forest Laboratories' fiscal 2013 plan assumed that generic competitors would settle at a 30 percent discount to the brand price and that the authorized generic distributor or AGD would achieve approximately a 44 percent market share through September 12, 2012.
However, the AGD has priced escitalopram at a 60 percent to 65 percent discount to the brand price, while its market share is about 40 percent.
In addition, the company forecasts full-year sales of branded Lexapro to be about $215 million, down from the previous estimate of $250 million. Based on current market data and given the greater than expected discounting, the company estimates the generic substitution rate is 88 percent compared to the originally anticipated 84 percent.
Forest Laboratories is also a distributor of Levothroid, a synthetic levothyroxine product for the treatment of hypothyroidism.
The company said that the maker of the drug has stopped manufacturing and shipping the product after the FDA indicated it has regulatory and quality concerns with respect to the manufacturer's facility. The manufacturer is continuing to work with the FDA to address the agency's concerns.
Forest Laboratories' annual sales of Levothroid are about $17 million. The company noted that if the manufacturing disruption continues for an extended period of time or if the product is subject to a recall, the loss of Levothroid sales and associated costs could reduce its earnings by about $0.03 per share for the full year.
In mid-April, Forest Laboratories reported a 40 percent decline in fourth-quarter profit, as sales from anti-depressant Lexapro plunged due to patent expiry in the quarter. Lexapro's sales for the quarter plunged 40 percent from last year to $355.8 million.
In Monday's regular session, FRX is trading at $35.18, down $0.51 or 1.43 percent on a volume of 257,272 shares.
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