AP News, January 29th, 2007
The Drugmaker Schering-Plough Corp. said Monday its fourth-quarter profit surged 75 percent as strong sales of its cholesterol, arthritis and medicines helped offset rising costs.
Kenilworth, N.J.-based Schering-Plough said net income totaled $182 million, or 12 cents per share, up from $104 million, or 7 cents per share, a year ago. The latest quarter includes a charge of 4 cents per share to streamline the company's manufacturing operations and a charge of a penny per share to license an over-the-counter heartburn treatment.
Excluding items, the company posted profit of 17 cents per share, in line with Wall Street's consensus estimate, according to a Thomson Financial poll.
"We're very pleased about the strong quarter, a strong year and a strong three-year track record," said Fred Hassan, who 3 1/2 years ago took over as chairman and chief executive officer and started an ambitious turnaround plan.
Hassan told analysts during a conference call that his company's sales, adjusted to include revenue from its joint venture with Merck & Co. on cholesterol drugs, have grown more than twice as fast as the average for other U.S. pharmaceutical companies over the past three years.
Sales grew 14 percent in the fourth quarter to $2.65 billion from $2.32 billion a year ago, beating analysts' forecast of $2.53 billion. The company said results were helped by a 34 percent rise in sales to $337 million for anti-inflammatory drug Remicade, for disorders such as rheumatoid arthritis and ulcerative colitis. Global sales of allergy drug Nasonex, which the company said is the fastest-growing nasal inhaled steroid, rose 37 percent to $253 million, with U.S. sales climbing 48 percent to $171 million.
Sales from its global joint venture with Merck, which sells Vytorin and Zetia, totaled $1.1 billion in the 2006 fourth quarter, up from $755 million in the 2005 period. Adjusting total sales results to include joint venture sales, Schering-Plough said it posted $3.2 billion of revenue, up 18 percent from $2.7 billion in the year-earlier period.
The company said sales of its Peg-Intron hepatitis C product declined 3 percent to $208 million primarily due to lower sales in Japan, as the number of new patients starting hepatitis C therapy leveled off there.
Selling, general and administrative costs grew 12 percent to $1.3 billion, reflecting ongoing investments in emerging markets and field support for new product launches, as well as higher promotional spending. Research and development spending increased 33 percent to $631 million due to more patients participating in clinical trial of experimental drugs and an upfront payment associated with the company's licensing of a nonprescription version of heartburn medication Zegerid.
For the full year, net income at $1.06 billion, several times the $183 million posted a year earlier, when the company had sharply lower income from the cholesterol venture and took a $250 million charge to cover costs related to government probes, since settled, regarding its manufacturing practices. Sales for 2006 totaled $10.6 billion, up 11 percent from $9.5 billion in 2005.
Schering-Plough shares fell 32 cents, or 1.28 percent, to $24.77 in early trading on the New York Stock Exchange.
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