Schering-Plough Corp.'s (SGP) third-quarter profit fell 16% on
increased charges while the company saw a 5% drop in sales of the
cholesterol drugs it sells jointly with merger partner Merck &
Co. (MRK)
The companies' joint venture has been under pressure since an
early 2008 study raised questions about the safety and
effectiveness of Vytorin and Zetia. Meanwhile, the $49 billion
Schering-Merck deal announced in March remains on track to close in
the current quarter. Merck is buying Schering to diversify its
pipeline, a move sparked by continuing generic competition, pricing
pressure and difficulty in bringing new drugs to market.
Schering-Plough's earnings dropped to $515 million, or 29 cents
a share, from $677 million, or 39 cents a share, a year earlier.
Excluding acquisition-related charges and other impacts, earnings
rose to 40 cents from 39 cents.
Net sales fell 1.7% to $4.5 billion, reflecting a
6-percentage-point hit from currency changes.
Analysts surveyed by Thomson Reuters were expecting earnings,
excluding items, of 40 cents a share on revenue of $4.47
billion.
Gross margin fell to 61.8% from 62% on the charges, and fell 1
percentage point excluding them on the currency chanages.
Three-fifths of the cholesterol venture's sales drop was due to
the foreign-exchange fluctuations. Sales slid 10% in the U.S.
Among Schering-Plough's non-cholesterol treatments, sales of
arthritis drug Remicade rose 8%, or 18% excluding currency changes,
while allergy treatment Nasonex saw a 3% increase, also held back
by foreign exchange rates. Cancer drug Temodar grew 2%.
Schering-Plough shares closed Wednesday at $29.01 and didn't
trade premarket. The stock is up 70% this year.
Merck is expected to report its results later Thursday.
-By Mike Barris and Kevin Kingsbury, Dow Jones Newswires;
212-416-2330; mike.barris@dowjones.com