Schering-Plough Posts 17 Percent Drop in 3Q profit

Thu, 10/22/2009 - 3:57am
LINDA A. JOHNSON AP Business Writer KENILWORTH, N.J. (AP) — Drugmaker Schering-Plough Corp. on Thursday ported lower revenue and a smaller profit in the third quarter, partly due to slightly higher spending on taxes and research. But the company, which soon will become part of much-larger Merck & Co., said that excluding unfavorable currency exchange rates, revenue was up 2 percent at $4.5 billion. The maker of allergy, hepatitis and cholesterol drugs also noted it has just launched three new products in the U.S. or other countries, including the Saphris tablet for schizophrenia and bipolar disorder. That went on sale this month in the U.S. The Kenilworth, N.J.-based company said it had net income of $477 million, down 17 percent from $576 million in last year's third quarter. It posted earnings per share of 29 cents, or 40 cents, excluding one-time items, down from 35 cents a year earlier. Analysts were expecting earnings per share of 40 cents on revenue of $4.47 billion. "The ongoing business is robust," Chief Executive Fred Hassan told analysts during a conference call. "Six of our top 10 largest-selling products had sales growth this quarter." Those include Remicade for rheumatoid arthritis and other immune disorders, allergy drug Nasonex and contraceptive Nuvaring. Hassan noted that three of the five "star" experimental drugs the company has been touting have received approval this year. Those include U.S. approval of Saphris, European approval of Simponi, a successor drug to Remicade, and sugammadex, which reverses the effects of muscle-relaxing drugs given along with anesthetics to surgery patients. That's been approved in Europe, but the Food and Drug Administration has required the company to do a new study, expected to be competed in the first half of 2010. Still, sales of prescription drugs were flat at $3.55 billion. Sales of consumer health products were up 2 percent at $282 million, led by a 33 percent jump for constipation treatment MiraLax, but nonprescription allergy pill Claritin was down 7 percent. The Coppertone sun care and Dr. Scholl's footcare lines both also had lower sales. Sales of animal health products dropped fell 12 percent, to $669 million. Merck is about to acquire Schering-Plough for $41.1 billion. Shareholders of both companies overwhelmingly approved the deal on Aug. 7, but they still need approval from U.S. and European regulators. The tie-up will vault the combined company to the No. 2 position in the industry. The companies' fates have been somewhat intertwined for years, through their joint venture selling the cholesterol drugs Vytorin and Zetia. But in July, Merck and Schering-Plough said they will pay $5.4 million to settle civil claims they covered up test results that cast doubt on the effectiveness of the two drugs. Their sales have been steadily declining since the first negative reports in January 2008. The deal is technically structured as a reverse merger, an obvious ploy to try to retain roughly $2 billion a year in revenue Schering-Plough gets from its partnership with Johnson & Johnson selling Remicade and successor Simponi which was approved this year in the U.S. and European Union. J&J is claiming that change of control of Schering-Plough will entitle it to all revenue from the drug, and the two companies now are in arbitration over it, with the decision not expected till well after the Merck acquisition closes. Schering-Plough has a few promising experimental drugs that analysts are watching closely, including boceprevir for hepatitis C, an anti-clotting drug known as TRA and a vaccine against Staph infections.

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