Schering-Plough's Earnings And The (Ongoing) Vytorin Problem
Schering-Plough is bringing up the rear of big pharma earnings season this morning--it reported later than normal because it apparently took longer to do all the accounting for a big acquisition--with a beat on the top and bottom line. But investors, as is usually the case, are more concerned about guidance.
And investors didn't get any this morningin the press release oron the hour-long conference call. Not even a forecast for the first quarter which is half over already. All the Chief Financial Officer would say is that "first-quarter sales will likely be impacted" by the ongoing Vytorin/Zetia controversy. (Vytorin is a combo of Schering's Zetia and Merck's Zocor.)
A much-debated study shows the cholesterol drug does a good job lowering the bad cholesterol, but didn't roto-rooter unhealthy plaque in the arteries. Prescriptions for SGP's most profitable drug, which it shares in a joint venture with Merck , have fallen. However, on the call officials said over the past couple of weeks "there appears to be stabilization of weekly (Vytorin/Zetia) prescription volumes, but it's too early to call it a trend."
They said they're closely monitoring the situation and that they "stand ready to take tough actions, if tough actions are needed." That sounds to me like a euphemism for the potential of more cost cuts.
In the meantime, the detailed data of the study have been submitted for presentation at the upcoming American College of Cardiology conference and for publication in a peer-reviewed medical journal. In addition, they're doing a much larger clinical trial to better study the heart effects of the drugs, but the results won't be available for a few years.
But the financial impact of falling Vytorin/Zetia sales is not SGP's only worry. It continues to be buffeted by investigations into the timing of the release of the study and the sales and marketing of the drug. The latest salvo comes from the House Energy and Commerce Committee which is not only seeking more information from the CEOs of SGP and MRK, but is now targeting CafePharmawhich is the web site where pharma folks go to gossip, whine, complain, and allegedly share internal info. Check out the Committee's letter to Cafe Pharma's web master here.
Schering-Plough Chairman and CEO Fred Hassan is giving his first TV interview since the Vytorin study came out to our Jim Cramer on "Mad Money" at 6 pm ET today. On the call, he said doctors are being bombarded with what he called "confusing and misleading interpretations" of the Vytorin study. (Was he referring to the news media?) But, in the end, he said he's "confident good science and common sense will prevail."
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