Ciba helped by nicotine patches: Pharmaceutical giant warns that sales of Nicotinell have peaked

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The Independent Online
NICOTINE patches, designed to help smokers to kick the habit, boosted last year's results from Ciba, the Switzerland-based pharmaceutical company.

But the group cautioned against expecting a similar contribution this year. It warned that sales of the product, launched early in 1992, had peaked in the first half and since fallen sharply.

Post-tax profits at Ciba, as the former Ciba-Geigy wishes to be known, rose 19 per cent to 1.5bn Swiss francs ( pounds 688m) on sales 6 per cent higher on a local currency basis at Sfr22.8bn.

The biggest contributor was the pharmaceutical division, responsible for 39 per cent of group turnover and more than half its profits. Pharmaceutical sales grew 13 per cent to Sfr6.4bn, with most of the growth coming from sales of Nicotinell, Ciba's nicotine patch. In the US, where it is known as Habitrol, it generated sales of more than Sfr474m.

But Heini Lippuner, Ciba's president and chief operating officer, described the demand as unexpected. The group attributed the surge partly to wholesale stock-building.

Many analysts also argue the popularity of patches was a temporary phenomenon, pointing out too that sales in 1992 in the US were half their expected levels. Patches are also vulnerable to the drive to cut healthcare costs.

'They are a fad product,' said Peter McDougall of BZW, the broker. 'Also, in the US, of the dollars 350m of sales around dollars 200m is re-imbursed - sooner or later the Clintons are going to start wondering why.'

Mr Lippuner said he expected sales growth to be lower this year, as a result of falling Nicotinell sales and pressure on costs.

Nevertheless he said he still expected an improvement as a result of productivity gains and a switch in accounting policies.

But most analysts expect the current year to be a tough one for Ciba, with Mr McDougall forecasting zero underlying growth in 1993.

Ciba has taken a number of steps which will ease the path to an eventual London listing, a possibility it described as 'definitely something we are considering'.

It is switching its accounting policies this year from a current value basis to conform with international accounting standards and is looking at replacing its three-tier share capital with a single share structure.

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