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Meda Falls Most in Three Months After Profit Margin Dropped

Nov. 2 (Bloomberg) -- Meda AB, Sweden’s largest publicly traded drugmaker, fell the most in almost three months in Stockholm after saying its profit margin in northern Europe dropped in the third quarter.

The shares declined 7.6 percent, the most since Aug. 8, to 59.30 kronor.

Meda’s earnings before interest, tax, depreciation and amortization margin for northern Europe dropped to 21 percent from 39 percent a year earlier, largely because of the loss-making acquisition of Antula Holding AB, a Swedish maker of over-the-counter medicines, in April, said Mattias Haggblom, an analyst at Danske Markets Equities in Stockholm. The company may also be facing pricing pressures in the region, Haggblom said.

“As northern Europe is a core area for Meda, from where the company originated, margin decline there is a key concern,” he said. Haggblom has a “hold” rating on the stock.

Net income climbed to 345 million kronor ($52 million) from 210 million kronor a year earlier, the Stockholm-based company said in a statement today, helped by a “strong start” for a skin cream it bought from Novartis AG this year. Sales increased 25 percent to 3.22 billion kronor, in line with the 3.17 billion-kronor average of eight analysts’ estimates.

Meda bought Elidel, a cream for mild to moderate atopic dermatitis, from Novartis in May to build up its dermatology business. The company is also counting on Dymista, a nasal spray for patients with seasonal allergic rhinitis, to bolster revenue. Meda filed for regulatory approval in the U.S. in April and in Europe last month.

Valeant Relationship

Meda licensed the rights to Elidel and Xerese, a cold-sore medicine, for North America to Valeant Pharmaceuticals International Inc. Valeant, which has pursued more than 10 acquisitions in the past year, approached Meda about a takeover, two people with knowledge of the matter said in July. Chief Executive Officer Anders Loenner declined to comment on the matter today.

Meda expects full-year sales to reach 12.7 billion kronor, it said today.

The company is considering further acquisitions in areas where it already operates in such as allergy and dermatology, Loenner told analysts and reporters today on a conference call.

Meda is also expanding in China, where it plans to have a sales force of 100 next year and a regulatory hub, Loenner said.

To contact the reporter on this story: Makiko Kitamura in London at

To contact the editor responsible for this story: Phil Serafino at

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