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Schering-Plough Quarterly Profit Boosted by Cholesterol Drugs

Reuters
Monday, 23 Jul 2007 | 11:41 AM ET

Schering-Plough on Monday said second-quarter earnings more than doubled, driven by growing demand for its Zetia and Vytorin cholesterol drugs and its treatments for arthritis and allergies.

The drug maker's quarterly profit increased to $517 million, or 34 cents per share, from $237 million, or 16 cents per share, in the year-ago period.

Excluding special items, Schering-Plough earned 41 cents per share. Analysts on average expected 35 cents a share, according to Reuters Estimates.

"Cost controls were the key to outperformance," J.P. Morgan analyst Roberto Cuca said in a research note.

Schering-Plough shares were up 37 cents, or 1.2 percent, to $31.86 in morning trade. Shares of rival Merck , which co-markets Zetia and Vytorin under a joint venture, were up more than 5 percent. Merck also reported strong results on Monday.

Schering-Plough said second-quarter sales rose 13 percent to $3.18 billion, excluding its 50 percent share of proceeds from the Merck cholesterol partnership. Sales topped Wall Street forecasts by about $110 million -- but would have grown only 10 percent if not for favorable foreign exchange factors.

Including revenue from its joint venture with Merck, sales jumped 15 percent to $3.8 billion. Zetia and Vytorin brought in $1.2 billion during the quarter, up 30 percent from a year earlier.

"Vytorin and Zetia are the only major cholesterol-lowering brands to have grown U.S. market share in 2007," Schering-Plough said in a statement.

Sales of less-potent treatments, including Pfizer's Lipitor, fell last year after inexpensive generic forms of the Merck cholesterol drug Zocor flooded the market.

Schering-Plough said it remains on track to complete its planned $14.65 billion purchase of the Organon drugs unit of Dutch chemical group Akzo Nobel by year-end.

The deal, announced in March, would bring Schering-Plough a number of promising experimental medicines that it hopes will reduce its reliance on Zetia and Vytorin for earnings growth.

The new medicines include contraceptives, an experimental treatment for schizophrenia, and a drug to reverse the effects of anesthesia.

The deal also includes animal health products. Sales of arthritis drug Remicade, which Schering-Plough sells outside the United States, soared 28 percent in the second quarter to $394 million. Sales of allergy treatment Nasonex jumped 22 percent to $295 million, bolstered by a strong marketing push.

Sales of the company's Peg-Intron treatment for hepatitis C edged up just 3 percent to $234 million, hurt by lower sales in the United States amid competition from Roche Holding's rival treatment, Pegasys.

Schering-Plough shares gained 10 cents to trade at $31.59 Monday morning on the New York Stock Exchange.

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