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Diet drug recall hits both drug makers and diet chains

September 18, 1997

The decision to pull the drugs Redux and one of the drugs in the popular ``fen-phen″ combination off the market for health concerns will cost diet chains and drug makers alike in prestige and profits.

But analysts say the hit to American Home Products, the marketer of Redux and the maker of the Pondamin brand of fenfluramine, will be short-term.

American Home Products said this week it expects the decision to cost it $200 million to $300 million in the third quarter. Deutsche Morgan Grenfell analyst Mariola Haggar expects the company to earn $3.36 a share for all of 1997, compared with $3.40 without the recall. That amounts to a decline of less than 3 percent.

Analysts at Deutsche Morgan Grenfell and Gruntal & Co., which expects 1997 earnings of $3.31 a share, are still urging investors to buy the stocks, despite the uncertainty over the impact of a spate of lawsuits filed by patients who attribute heart and lung problems to the drugs.

Redux and Pondamin churned out sales of $132 million and $173 million last year, although Pondamin is 24 years old and Redux was introduced halfway through the year. In 1998, sales will drop to zero for Redux developer Interneuron Pharmaceuticals and American Home Products’ Wyeth-Ayerst Laboratories division.

The effect on diet centers is less certain, but most chains are seeking to transfer patients to other diet remedies.

Diet centers responded quickly when critics called them ``pill mills″ and patients started asking about the side-effects of diet drugs, with many jettisoning Redux and ``fen-phen″ before this week’s recall at the request of the Food and Drug Administration.

Two weeks before the recall, La Jolla, Calif.-based Jenny Craig took the 700 of its 70,000 customers taking Redux and fen-phen off the drugs.

Jenny Craig now offers no prescription drugs, but many diet chains are replacing fenfluramine with alternatives such as Prozac.

Some have switched to so-called ``herbal fen-phen″, which use the herbal version of the chemical ephedrine, but a pending FDA proposal would ban such products as unsafe.

Nutri/System has replaced fen-phen with ``phen-pro″ _ Prozac and phentermine.

Bobbie Roscoe heard too many stories about fen-phen to try it. Since May, the 5-foot-4 restaurant worker from Ochoee, Fla., has gone from 180 pounds to 143 on phen-pro.

``You name it, I tried it,″ said Ms. Roscoe, 42. ``I ordered stuff out of magazines, bought everything out of WalMart _ Slimfast, Acutrim. ... Now I’ve dropped over 35 pounds. You still have to exercise, drink your water and things like that. It’s not all in a pill.″

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