Schering-Plough Swings to Loss
On Organon Acquisition
By ANDREW EDWARDS
February 12, 2008 8:15 a.m.
Schering-Plough Corp. swung to a fourth-quarter loss on charges related to November's purchase of Organon BioSciences, as the company faces what it called "ever more critical scrutiny" of the pharmaceutical industry.
The Kenilworth, N.J., pharmaceutical company reported a net loss of $3.36 billion, or $2.08 a share, compared with a net income of $204 million, or 12 cents a share, a year earlier. The latest results included charges related to the €11 billion ($16 billion) acquisition of Organon from Akzo Nobel NV, including a $3.75 billion in process research-and-development charge. Excluding items, the company's earnings would have risen to 27 cents a share from 17 cents.
Revenue rose 41% to $3.72 billion, including a seven percentage-point boost from the beat-down dollar. The mean estimate of analysts polled by Thomson Financial was for earnings of 24 cents a share on revenue of $3.11 billion.
The company's net sales at its 50/50 cholesterol joint venture with Merck & Co., which includes the drugs Vytorin and Zetia, rose 33% to $1.4 billion. Prescriptions for Vytorin, a combination of simvastatin and Zetia, took a hit in January after a study showed it performed no better than generic simvastatin. Simvastatin, once known as Zocor, lost patent protection in 2006. January data aren't included in the latest results. Merck and Schering-Plough have stood behind Vytorin's effectiveness in reducing bad cholesterol.
"As we begin 2008, new challenges have emerged, especially the initial reaction to the Enhance trial," said Chief Executive Fred Hassan. "We and our joint venture partner Merck acted with integrity and good faith with respect to that trial. We stand behind Vytorin and Zetia, behind the validity of the science, and behind our commitment to doing what's right for patients and physicians."
The trial was completed in 2006, but Merck and Schering-Plough have been criticized for taking so long to release the data. Two congressional committees are investigating the reasons behind the delay and probing stock sales by company executives.
Schering-Plough said Tuesday "the pharmaceutical industry continues to be subject to ever-more critical scrutiny, where events can be mischaracterized and drive amplified reactions. The company believes that new scientific data are best presented and discussed at appropriate scientific and medical forums."
Sales of anti-inflammatory Remicade, rose 35%. Sales of allergy treatment Nasonex rose 7%, while Clarinex sales grew 6%.
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