Pharmaceutical and biotech companies are expected to post only modest earnings gains in a third quarter fraught with increased regulatory scrutiny, lack of new potential blockbuster drugs and intensifying competition from generic drug makers, industry analysts said.
“I haven’t seen anyone say things are getting better or worse,” Jon LeCroy, an analyst with investment bank Natexis Bleichroder, told the Associated Press.
One of the best performers in the quarter is expected to be Schering-Plough, which analysts said is scoring well with its cholesterol-lowering drug Vytorin.
Pfizer suffered a blow in the quarter when a study showed its Lipitor is no more effective than other statin drugs, and in some cases has worse side effects.
However Pfizer is seeing positive results from its new drug Lyrica, used to treat nerve pain caused by diabetic neuropathy and shingles, investment bank Rodman & Renshaw wrote in a research note. Lyrica is perceived to be Pfizer’s successor to epilepsy drug Neurontin. 
Eli Lilly announced last week that it would add a black-box warning to its ADHD drug Strattera to emphasize the risk of suicidal thoughts by children and teens. As a result LeCroy estimated in a report that instead of seeing Strattera sales stabilize in 2006, they will continue to decline through 2009.
For Genentech, strong sales of Avastin and Herceptin could drive earnings above analyst expectations, wrote Merrill Lynch analyst Carrie Gray in a research report. Rituxan sales also look strong in the quarter and could beat estimates, but industry data indicate Tarceva sales could fall short of expectations, she added.