Upjohn Stock Surges On Merger Rumors

The price of Upjohn Co. stock shot up 9 percent Friday, fueled by speculation over a merger between the pharmaceutical company and Sweden’s acquisition-minded Pharmacia AB.

Shares of Upjohn, maker of Kaopectate stomach medicine, painkiller Motrin IB and the baldness drug Rogaine, gained $3.37-1/2 to $39.62-1/2 on the New York Stock Exchange.

Pharmacia shares closed higher in Stockholm. Its U.S. shares rose $1.12-1/2 to $25.37-1/2 on the Nasdaq Stock Market.

Upjohn spokesman John Lambrechts declined comment on the merger reports, which appeared in European newspapers.

Upjohn, based in Kalamazoo, Mich., has been considered by industry analysts to be a prime takeover target for more than a year.

Patents on many of its major prescription drugs - such as the anxiety drug Xanax, the sedative Halcion, and Ansaid, a painkiller - have expired, prompting competition from cheaper generic copies. The company’s research efforts on new drugs are considered weak compared to its competitors.

Freedox, a proposed drug for brain and spinal cord injuries that has been the company’s best hope to boost profits, has run into obstacles with U.S. regulators.

Nonetheless, the company’s profits have been growing due to cost cutting. Its respected sales force has generated new revenues through joint marketing deals in which Upjohn is paid for its salespeople to promote drugs made by others.

Upjohn profits for the first six months of 1995 were up 5 percent to $267.5 million, with sales 4 percent higher than a year ago. Last year it earned $489 million, up 23 percent. Sales declined 2 percent to $3.27 billion.

Pharmacia AB, based in Stockholm, is one of Europe’s largest drug companies, but has a relatively small business presence in the United States - something it would like to improve.

It specializes in drugs in specific niche areas, hoping to dominate these markets.

Among its major products are the Nicotrol smoking cessation patch, sold in the United States by Johnson & Johnson.