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News
Drug stocks hammered
June 22, 2001: 11:17 a.m. ET

Merck, Schering, AHP shares lower after round of bad news, drag Dow down
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NEW YORK (CNNfn) - Drug stocks fell sharply Friday, dragging two major stock market gauges with them, as Merck warned about earnings and regulatory concerns dampened the profit outlook at two other big U.S. pharmaceutical companies.

The Dow Jones Industrial average lost about 90 points to 10,625 at mid-session as shares of Merck & Co. (MRK: down $6.32 to $68.15, Research, Estimates) tumbled some 8 percent.

Declines in Schering-Plough (SGP: down $3.43 to $37.12, Research, Estimates) and American Home Products (AHP: down $1.88 to $60.32, Research, Estimates) – related to problems with manufacturing and drug approval – also helped drag the drug sector lower and pulled the broader S&P 500 index down about 1 percent.

Merck warned Friday that second-quarter and full-year earnings would fall short of expectations, citing disappointing sales of its arthritis drug Vioxx. The news was especially troubling to investors who have turned to major drugmakers, with their more predictable earnings growth, as safer havens during the market's recent turmoil.

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Meanwhile, Schering-Plough stock slipped more than 7 percent after the maker of the popular allergy drug Claritin said the Food and Drug Administration issued reports citing ongoing production problems first identified in February.

And American Home Products said the FDA rejected approval of a new drug that speeds healing in severe bone fractures. The Madison, N.J.-based company's stock fell more than 3 percent in early Friday trading.

Click here for a look at drug stocks

Other drug makers also fell, including Pfizer (PFE: down $2.08 to $42.79, Research, Estimates)  and Dow component Johnson & Johnson (JNJ: down $1.14 to $51.88, Research, Estimates).

Jack Baker, head of equities at Putnam Lovell Securities, said declines in Merck are often a good time to jump in. "If you are not in the stock, I'd start picking away at it," he told CNNfn's Market Callgraphic

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