BUSINESS The decline came on news that Crompton was being investigated by U.S. and European regulatory officials for possible rubber chemicals price fixing. The largest increase was seen at Cabot Corp.: a 26.4% rise to $26.54 per share. However, this was a recovery of sorts for Cabot, whose stock price had been falling earlier in the year, thanks to investor worries about its sales of products to the electronics industry Despite the rise in the fourth quarter, Cabot stock was still off 257% for the year. Drug and biopharmaceutical company stocks went through nearly identical gyrations. On Nov 25, C&EN's indexes track-
STOCKS TURN IN ANOTHER BAD YEAR Last-minute lift failed to salvage 2002 for chemical, drug, and biotech company stocks WILLIAM J. STORCK, C&EN NORTHEAST NEWS BUREAU ANN M. THAYER, C&EN HOUSTON
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ANY WORRIES AFFECTED I N -
vestors in the fourth quarter: possible war with Iraq, the oil strike in Venezuela, the seemingly continued malaise in the U.S. economy and just how much the average consumer would spend while holiday shopping. Nevertheless, stock prices at chemical, pharmaceutical, and biotechnology companies more than held their own when compared with the end of the third quarter. In fact, for the first two months of the fourth quarter, chemical stocks were doing quite well. By the last trading day in November, C&EN's index of 25 chemical company stocks had climbed 8.3% from the end of September to 144 (1992 = 100). However, the worries set in and the index fell back to close the quarter at 139, still 4.9% above the end of the third quarter. This was half the 9.9% increase seen in the Dow Jones industrial average, but a far cry from the 175% decline that the chemical index experienced in the third quarter. Thus, the chemical index finished just 3.5% below its quarterly high and 12.2% above its low, set on Oct. 9. Although the chemical index lagged behind the Dowjones in the third quarter, it beat out the broader index for the full year, falling 9.8% from the end of 2001, compared with a 16.8% decline for the Dow Jones. However, no matter how one looks at the results, they mark the third straight year of decline for both indexes. Quarter-to-quarter increases in the October-to-December period were almost as common among the 25 companies as declines were in the full-year comparisons. When compared with the end of the third quarter, 16 chemical firms saw their stock prices rise, with nine falling. For the full year, 18 firms had lower prices at the end of 2002 than they did at year-end 2001, with seven showing gains. The largest percentage decline among the chemical stocks was recorded by Crompton Corp., falling 40.8% for the quarter. Crompton also had the distinc12
C&EN
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JANUARY
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tion of leading the index down to its Oct. 9 low, when the company's stock fell 35.5% from the previous day to $5.90 per share.
CHEMICAL STOCKS Prices for most of the group rose in the fourth quarter FOURTH-QUARTER
CHANGE FROM
STOCK PRICE 3
THIRD-QUARTER
LOW
CLOSE
CLOSE
CLOSE
$46.19 $40.59 23.67 31.16 15.90 21.01 19.53 27.-45 24.10 37.97
$42.75 28.45 18.25 26.54 30.21
1.8% 12.5 3.0 26.4 -17.9
-8.9% 18.5 -21.3 -25.7 -30.7
HIGH
Air Products Albemarle Arch Cabot Cambrex
CHANGE
PRICE/
FROM 2001 EARNINGS RATIOb
18 18 152 16 15
Crompton Cytec Industries Dow Chemical DuPont Eastman Chemical
10.50 27.66 31.90 44.65 40.53
5.68 19.34 24.50 36.12 35.35
5.95 27.28 29.70 42.40 36.77
-40.8 24.3 8.8 17.5 -3.7
-33.9 1.0 -12.1 -0.3 -5.8
22 16 59 24 33
FMC Corp. H.B Fuller Georgia Gulf W.R. Grace Great Lakes Chemical
32.02 30.30 24.90 2.50 26.70
25.21 25.87 19.50 0.99 22.78
27.32 25.88 23.14 1.96 23.88
5.8 -2.7 1.2 22.5 -0.6
-12.5 -10.0 25.1 26.5 -1.6
10 16 54 2 29
Hercules IMC Global Lubrizol Monsanto NL Industries
10.46 13.05 31.25 20.21 18.66
8.67 10.46 26.21 14.48 13.90
8.80 10.67 30.50 19.25 17.00
-4.5 -11.5 7.9 25.9 17.2
-12.0 -17.9 -13.1 -43.0 11.3
13 152 13 22 28
PPG Industries Praxair Rohm and Haas Solutia Stepan
52.80 59.00 36.18 6.60 28.40
41.41 49.60 24.00 2.70 24.73
50.15 57.77 32.48 3.63 25.00
12.2 13.0 4.8 -30.5 -6.9
-3.0 4.6 -6.2 -74.1 3.0
18 18 22 10 15
144
123
139
4.9%
-9.8%
8932
7286
8342
9.9%
-16.8%
C&EN indexc (1992 = 100) Dow Jones industrial average
—
a Adjusted for stock splits, b As of Dec. 31, 2002. Excludes extraordinary and nonrecurring items. c Based on the average stock price for the above-named 25 companies.
HTTP://WWW.CEN-ONLINE.ORG
ing leading companies in both sectors reached fourth-quarter peaks: Drug stocks rose steadily during the first two months of the quarter to hit a high of 390 (1992 = 100), up 16.1% from an early October low, while biotech stocks jumped 28.9% to 330. However, a decline in share prices followed in December, and pharmaceutical stocks ended the year at 366, which was still 8.9% above the quarterly low but 26.0% below the 2001 close and well off the Dow Jones. Biopharmaceutical stocks were no different—they closed up 14.5% from their quarterly low but plummeted 38.0% from the end of 2001. Biotech stocks also underperformed the broader NASDAQ market, itself down 31.5% for the year. Merck, Eli Lilly and Wyeth posted double-digit gains in the quarter, having received positive product development and approval news during the period. This was also true for Medlmmune, which jumped 30.2%. And products moved through development and helped boost prospects for Biogen— up 36.9%—and Genzyme, up 43.5%. However, while more than half the major drug firms and 11 out of 15 leading biopharmaceutical companies had fourthquarter gains, only two companies reported higher stock prices for all of 2002. Surprisingly, both gainers were biopharmaceutical companies, part of a group where all others lost from 14 to 74% over the year. Cytogen's shares increased 8%, but they now trade at just over $3.00 per share. They only reached that level after the firm executed a l-for-10 reverse stock split in October when its shares were just 34 cents each. In contrast, Gilead Sciences' modest 3.5% advance, to end the year at $34.00 per share, came from solid company growth. CLEARLY, INVESTOR enthusiasmforbiopharmaceutical and drug company stocks waned in 2002. The sectors were not immune to economic uncertainties and corporate accounting issues. Bristol-Myers Squibb's deal with ImClone Systems shook confidence in collaborative deals andbiotechproductpronouncements. BMS is also restating earnings as a result ofinventory issues. Its stock ended the year down 54.6% at $23.15 per share. Schering-Plough's stock fell 38.0%, to $22.20, as the company dealt with regulatory and production issues and declining sales. Wyeth's stock lost a lot of ground in the third quarter after clinical trial results challenged the safety of its hormone replacement products. For the year, its stock was off 39.0%. Among major drug firms, onlyJohnson &Johnson, Pharmacia, and Merck showed HTTP://WWW.CEN-ONLINE.ORG
DRUG AND BIOTECH STOCKS Stocks rose in fourth quarter, but not enough to overcome decline for 2002 CHANGE FROM CHANGE PRICE/ THIRD-QUARTER FROM 2001 EARNINGS CLOSE RATIO1* CLOSE
FOURTH-QUARTER STOCK PRICE* LOW CLOSE HIGH
MAJOR PHARMACEUTICAL COMPANIES Abbott Laboratories $45.89 $36.65 $40.00? Baxter International 32.09 24.22 28.00 ! 27.84 21.05 23.15 j Bristol-Myers Squibb Eli Lilly 69.00 55.42 63.50 I Johnson & Johnson 61.11 53.11 53.71 !
-1.0% -8.3 -2.7 14.7 -0.7
-28.3% -47.8 -54.6 ! -19.1 -9.1
20 16 15 26 25
Merck Pfizer Pharmacia Schering-Plough Wyeth
23.8 5.3 7.5 4.1 17.6
; ( \ I S
-3.7 -23.3 -2.0 -38.0 -39.0
18 21 28 15 17
60.31 33.87 46.00 23.25 38.46
44.13 28.30 37.90 17.30 32.05
390
336
366
7.0%
I -26.0%
_
8932
7286;
8342
9.9%
I -16.8%
___
BIOPHARMACEUTICAL AND DRUG DISCOVERY COMPANIES 15.9% Amgen $51.75 $43.66 $48.34 \ Biogen 46.23 28.89 40.06 1 36.9 9.55 1 11.58 20.1 Celera Genomics 7.05 19.2 Cephalon 59.05 39.04 48.67 t Chiron 35.47 37.60 ? 7.6 42.51
-14.4% -30.1 -64.2 -35.6 -14.2
C&EN pharmaceutical index0 (1992 = 100) Dow Jones industrial average
56.61 I 30.57 41.80 22.20 37.40
36 36 def def 31
Cytogen Genentech Genzyme Gilead Sciences Icos
7.79 36.15 36.20 39.75 32.54
2.83 30.96 21.00 30.85 20.03
3.25? 33.16 I 29.57 \ 34.00 \ 23.41 !
-3.0 1.6 43.5 1.4 11.6
8.0 \ -38.9 \ -50.6 3.5 i -59.2
i ! i
def 38 30 def def
Medlmmune Millennium Pharmaceuticals Protein Design Labs Vertex Pharmaceuticals Xoma
28.99
21.19
27.17J
30.2
I -41.4
i
52
11.19 9.84 20.84 5.99
7.94! 7.19 8.50 5 7.40 15.76 i 15.85 4.23 J 3.95
i I \ \.
!
def def def def
C&EN biopharmaceutical indexd (1992 = 100) NASDAQ index
330 1488
256 1114
a Adjusted for stock splits, b As of Dec. 31, 2002. Excludes extraordinary and nonrecurring items, c Based on average stock value for the abovenamed 10 companies, d Based on average stock value for the above-named 15 companies. def * deficit in previous four quarters.
293 I
12.1% 13.9%
1336
-67.6 -74.1 -35.5 -57.1
\ -38.0% I -31.5%
m_
—
C&EN biopharmaceutical index, 1992 = 100 500 High Close Low 400
300
200
just single-digit declines. J&J's diversified business helped keep its shares relatively stable, ending the year down 9.1% at $5371. Pharmacia's stock was stabilized for the latter half of the year after Pfizer's takeover bid valued it at roughly $45 per share; Pharmacia ended 2002 down just 2% at $41.80. On the first trading day of the newyear,
-14.8 2.4 -14.3 -32.5
L
-4-
M,hri
I I I I I I L D J F M A M J J A S O N D I 2002 '
a bit of good economic news brought renewed optimism to the Dowjones and the chemical, pharmaceutical, and biopharmaceutical stock indexes. The broader index rose 3.2% between Dec. 31 andJan. 2, while chemicals scored a 1.6% gain, and drug and biopharmaceutical stocks were both up at least 3.0%. • C & E N / JANUARY 13, 2003
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