One-on-One with Schering-Plough CEO Fred Hassan
In a CNBC and Mad Money exclusive, Cramer sat down with Schering-Plough CEO Fred Hassan for his first interview since the controversy over the effectiveness of the cholesterol drug Vytorin.
When a study released in mid-January showed that Vytorin – a combination of the drugs Zocor and Zetia – may be no more effective at reducing arterial plaque buildup than just taking Zocor alone, shares of SGP took a nosedive. But the company reported earnings with a narrower loss than expected Tuesday morning, a move that shocked analysts who had been expecting Schering to disappoint on the Vytorin news.
Hassan told Cramer the company pulled off such a surprising quarter because it was able to convince people that its business extends beyond Vytorin. Also, Hassan said that analysts seemed to be so distracted by Vytorin that they forgot about Schering’s huge overseas business. It was its strong international growth that Hassan said accounted for the earnings upside surprise.
But Hassan didn’t downplay the Vytorin issue. He threw his full support behind the drug, which is a joint-venture between Schering and Merck , telling Cramer that studies prove Vytorin can reduce LDL (bad) cholesterol. The particular study that brought on the skepticism was small and concentrated on a special population with very high cholesterol, Hassan said. Even then, the drug’s safety and tolerability profiles – two of the biggest indicator’s of a drug’s efficacy – remained normal.
>Read More:Congress Widens Probe of Vytorin Makers
Hassan also spoke about Schering’s recent acquisition of Organon BioSciences from Dutch chemical giant Akzo Nobel. Organon is best known for its NuvaRing contraceptive – the first new birth control product to be released in almost 50 years. Organon also develops Sugammadex, a drug used to help patients rapidly recover from anesthesia that is gaining traction in hospitals and with anesthesiologists, according to Hassan. These drugs herald the type of innovation that Schering hopes will guide its business model going forward.
When Hassan took the helm of a struggling Schering-Plough in 2003, he bought back stock as a way to calm the nerves of those who thought the company was headed toward a downward spiral. To reassure analysts and shareholders, Hassan told Cramer that at the next legal opportunity he gets to buy back more stock, he plans on picking up $2 million in additional SGP shares “whatever the price may be.”
The choice is clear, Cramer said. Vytorin is not Schering’s only shtick. With a global footprint and a commitment to growth and innovation, SGP under the leadership of Fred Hassan is the only pharmaceutical stock he thinks is worth owning.
Jim's charitable trust owns Schering-Plough.
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