That cold you caught in May helped produce sharply higher profits for most of the nation's drug companies in the second quarter, according to industry analysts.
"More people got sick in the second quarter than got sick in the first quarter," Joseph Riccardo, an analyst at Bear Stearns, said in explaining the improved earnings of many U.S. pharmaceutical giants.
Eli Lilly & Co. said Thursday that its earnings rose 22 percent in the second quarter, while Smithkline Beckman Corp. reported a 16 percent increase in the period. Most other large drug companies have reported similar-sized increases in the past few days.
Analysts say the drug industry's health can be traced to the unusually cold weather and poor economic conditions in the first part of the year.
Fewer people ventured out of their homes in the cold weather, cutting down both visits to the doctor and drug store and trips to other places where people could mingle and spread germs.
"Severe weather, both here and in Western Europe, cut down the traffic to outpatient clinics and hospitals," said Robert Benezra, an analyst at Alex. Brown & Sons.
And the sagging economy put a damper on nonemergency visits to physicians, analysts said. According to Benezra, many Americans who felt ill "went home and had a shot of Jameson's whiskey and some hot tea and went to bed."
Drug companies didn't exactly suffer in the first quarter--most reported slightly higher profits, in part because of improved profit margins. But analysts said Americans could stay away from their doctors only so long, and the pent-up demand created in the quarter burst late in the period, fueling a sharp increase in business in the second quarter.
As the weather improved and more people got out of the house, the opportunities to spread colds and other illnesses increased. The incidence of respiratory illness, in particular, was more frequent in the second quarter, aiding sales of cough and cold medicine and antibiotics, industry analysts said.
The second-quarter profit increases follow several lackluster quarters for the drug industry, which has been ailing because of unfavorable currency-transaction results in its considerable foreign business, poor overseas market conditions, and problems in nondrug operations hit hard by recession.
One company reporting lower earnings was Upjohn Co.; analysts said the company's industrial chemicals business, a major supplier to the auto industry, was lagging because of that industry's woes.
Analysts said drug companies also benefitted from higher profit margins and the introduction of new products.
Benezra predicted that the second quarter was only a preliminary dose of the kind of results the drug industry can expect in the near future as profit margins improve and new products are introduced.
"Each quarter will get stronger for many companies this year," he said, predicting that next year could be the best year for the pharmaceutical industry in a decade or more.