Schering-Plough's income dips in 3rd quarter 2009, hit by charges

Schering-Plough, which is close to consummating its $41.1 billion merger with fellow US drug major Merck & Co which will put it into number two position in the global pharmaceutical industry, posted net income of $515 million, or 29 cents a share, compared with $614 million, or 35 adjusted earnings of 40 cents a share versus 39 cents, and in line with consensus analysts' forecasts.

"This quarter we delivered operational top-line growth, reconciled bottom-line growth and major pipeline successes. We powered through - even in the face of tough global economic and currency headwinds," said Fred Hassan, chairman and chief executive." Moreover, he said in a conference call with analysts, 'the ongoing business is robust.'

Mr Hassan also noted that three of the five "star" experimental drugs the company has been touting have received approval this year. Those include: US approval of Saphris (asenapine, a new drug in development for the treatment of schizophrenia and bipolar I disorder; European approval of Simponi (golimumab), a successor drug to Remicade (infliximab), and sugammadex, which reverses the effects of muscle-relaxing drugs given along with anesthetics to surgery patients. That has 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.

Product performance

With the majority of the firm's business generated overseas, revenue for the quarter fell almost 2% to $4.5 billion, impacted by an unfavorable foreign exchange rate had of about 6%. Sales of prescription pharmaceuticals for the 2009 third quarter totaled $3.5 billion, reflecting operational growth of 6 %offset by a 6% unfavorable impact from foreign exchange.

Net sales of the company's cholesterol franchise, which include sales of the cholesterol joint venture plus sales recorded by Schering-Plough in non-joint venture territories (such as Japan and Latin America), declined 5% in the quarter to $1.1 billion, reflecting a 2% operational decrease and a 3% unfavorable impact from foreign exchange. Sales fell 1% in the USA, but increased 3% internationally, reflecting operational growth of 10% and a 7% unfavorable impact from foreign exchange.

Remicade, which is approved for inflammatory diseases, delivered year-over-year growth of 8% with sales coming in at $608 million. The drug's growth is being driven by strong demand in the rheumatoid arthritis market, as well as a significant unmet need in the Crohn's disease and ulcerative colitis markets. Recent approvals for pediatric Crohn's, psoriatic arthritis and chronic severe plaque psoriasis should help drive growth. We expect Remicade to continue to be a strong contributor to revenues.

While sales of products such as Temodar (temozolomide) at $278 million, up 2%, Nasonex (mometasone furoate monohydrate) at $266 million, up 3%, Nuvaring, a new combined hormonal contraceptive vaginal ring. ($131 million, up 11%), and Claritin (loratadine) at $95 million, up 9%, increased, others like PEG-Intron (peginterferon alfa-2b) were down 16% at $198 million, Follistim/Puregon (follitropin beta) at $122 million, down 14%, and Clarinex (desloratadine) at164 million, down 7%),recorded a steep decline in sales over the reporting quarter.