Awaiting Sale Ruling, Bergen Brunswig Posts 22% Income Gain

Bergen Brunswig Corp. said net income rose 22% in the fiscal second quarter as the No. 3 U.S. drug wholesaler benefited from rising demand for pharmaceuticals and new supply contracts.

Bergen’s net income for the three months ending June 30 rose to $27.2 million, or 53 cents a share, from $22.2 million, or 44 cents a share, a year earlier. Revenue rose 20% to $3.51 billion from $2.93 billion.

Bergen is waiting on a court ruling in its fight with the Federal Trade Commission to be bought by No. 2 wholesaler Cardinal Health Inc. of Dublin, Ohio, for about $4.5 billion. While that’s being decided, Bergen is pushing to nail down more contracts to supply drugs and other supplies to pharmacies as drug sales in general increase.

“Our third-quarter growth was very strong,” said Neil Dimick, Bergen chief financial officer, in a statement. “Bergen’s strategy is to align with customers who are among the leaders in their respective markets.”

The third-quarter results matched expectations, based on the average estimate of nine analysts polled by First Call Corp. Despite the bullish report, Bergen’s stock fell $2.50 a share Wednesday to close at $51.25 on the New York Stock Exchange.

For the first nine months, net income totaled $67.3 million, or $1.31 a share, up 10.5% from $60.9 million, or $1.20 a share, a year earlier. The 1998 results include merger expenses of $9.8 million related to Bergen’s pending acquisition by Cardinal. The 1997 earnings included $5.8 million in expenses related to Bergen’s terminated merger with Ivax Corp. Revenue grew 16% to $10.1 billion from $8.6 billion.

Drug wholesalers are benefiting as pharmaceutical companies develop more products for chronic conditions, such as high blood pressure, and health insurers let doctors treat more patients with drugs before trying more expensive options such as surgery.

U.S. District Judge Stanley Sporkin is expected to rule this week on the FTC’s bid to block Cardinal’s purchase of Bergen and rival McKesson Corp.’s planned $3.3 billion acquisition of AmeriSource. The FTC has said it fears that the two acquisitions would allow the larger companies to raise prices and hamper new entries into the drug distribution market.