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Mon Mar 11, 4:49 PM ET
By Ransdell Pierson
NEW YORK (Reuters) - U.S. pharmaceuticals firm American Home Products Co. changed its name to Wyeth on Monday, a move analysts said would help erase memories of the fen-phen slimming cocktail nightmare that cost it $13 billion.
The name was derived from its Wyeth-Ayerst prescription drugs and vaccines business, which accounted for 78 percent of the company's 2001 revenues of $14.1 billion. American Home built that business around a Philadelphia drugmaker called John Wyeth & Brother it purchased from Harvard University in 1931.
"For the past four years, American Home has always been featured in the news as the fen-phen company. So by changing their name, maybe they want to put fen-phen in the archives and never look at it again," said David Saks, a drug analyst for the Saks MedScience Fund at Ladenburg Thalmann.
"It's mind-boggling they made relatively little money from the diet drugs, but are having to shell out $13 billion in cash to get fen-phen behind them," he said.
Other analysts agreed that fen-phen was a likely catalyst for the name change, but Wyeth Chief Executive Robert Essner said otherwise.
Rather than push fen-phen to the background, Essner said the name change underscores the company's success over the past 15 years in divesting units that made herbicides, medical devices, candy, foods like Chef Boy-Ar-Dee pasta and household products like Easy Off oven cleaner.
"We're not changing our name to signify a change of direction, but to demonstrate the fact that we've established ourselves as one of the leading pharmaceutical firms in the world," Essner said in an interview last Friday.
The name change comes two months after approval of a $3.75 billion national settlement covering hundreds of thousands of Americans who claimed they were harmed by two American Home drugs once used to produce fen-phen. It was one of the biggest product-liability settlements in history.
STAGGERING FEN-PHEN HEADACHE
Essner said he considers fen-phen a "painful" chapter, but one that is virtually closed now that only a few hundred of the six million Americans who once took the diet drugs still have court cases pending against the firm.
All told, the firm has taken $13.2 billion in charges for liability to former users of the drugs, which were recalled in 1997 after being linked to heart valve problems.
The name change also highlights that the less-diversified firm has become one of the world's most profitable drugmakers, Essner said. The Madison, New Jersey-based company has promised earnings growth of at least 17 percent in 2002, thanks to nine new prescription medicines in the past three years, all launched as it wrestled with the fen-phen travails.
Essner said Wyeth's non-prescription drugs business and a unit that makes drugs and vaccines for animals will be kept because they dovetail with the firm's core medicines focus.
The consumer drug business raked in $2.4 billion last year, on sales of popular non-prescription products like painkiller Advil, Centrum vitamins and Robitussin cough suppressant.
CLARITIN COPYCAT PLANS
Indeed, the company recently caused shock waves by saying it aims to sell a non-prescription form of Schering-Plough Corp's top-selling allergy drug, Claritin.
"It could become one of the biggest non-prescription drug categories," Essner said, referring to antihistamines like Claritin that don't cause drowsiness.
Wyeth's newest prescription drugs include ulcer treatment Protonix, which had sales of $561 million last year; Prevnar, a vaccine against pneumococcal disease that garnered almost $800 million; and hemophilia treatment ReFacto.
There is also Enbrel for rheumatoid arthritis, seen boasting sales of $1 billion in 2002. Wyeth owns a 41 percent stake in Seattle biotech firm Immunex Corp., which developed and co-markets the blockbuster.
"We think we have some other good things coming this year," Essner said, including the planned launch of FluMist -- the first intra-nasal vaccine against the influenza virus.
Rival drug giants such as Merck & Co., Bristol-Myers Squibb Co. and Eli Lilly and Co. are facing sharply lower earnings growth because U.S. patents have lapsed on their key medicines, thereby allowing cheaper copycat medicines to undermine their sales.
By contrast, Wyeth is facing little patent-expiration risk. Even Premarin, its 60-year-old female hormone replacement treatment, has no generic rival and saw annual sales top $2 billion last year. Anti-depressant Effexor hit $1.5 billion.
"American Home has lots of momentum now that fen-phen has been put to rest and that it has new products," said Mara Goldstein, a drug analyst for CIBC World Markets.
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