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Profit rises 62% at Schering-Plough

Sales of two cholesterol drugs help the bottom line along with a recent downsizing campaign.

January 30, 2007|From Bloomberg News

Schering-Plough Corp.'s fourth-quarter earnings surged 62% as the combined sales of its Vytorin and Zetia cholesterol drugs jumped to $1.1 billion.

Net income rose to $204 million, or 12 cents a share, from $126 million, or 7 cents, a year earlier, the Kenilworth, N.J.-based company said Monday. Revenue increased 14% to $2.7 billion, spurred by a 46% jump for Zetia and Vytorin.

Chief Executive Fred Hassan closed plants and fired 2,000 workers to cut $100 million in 2007 costs. Schering, the eighth-biggest drug maker by sales, said it expected revenue from the cholesterol drugs to increase this year even as the treatments faced competition from generic copies of Merck & Co.'s Zocor.

Hassan "did some restructuring and downsizing that made them a more streamlined company operationally, which was key," said Joe Tooley, an A.G. Edwards & Sons Inc. analyst in St. Louis. "Now they are growing off a strong product, and they don't have a bloated infrastructure they have to maintain."

Profit, excluding certain costs, matched the 17-cents-a-share estimate of 14 analysts surveyed by Bloomberg. Schering had a 4-cent charge from acquisitions and restructuring costs and a 1-cent cost from licensing an over-the-counter heartburn treatment.

Schering-Plough's shares fell 27 cents, or 1%, to $24.82. The stock gained 13% in 2006, beating the 5.8% increase in the Standard & Poor's 500 Health Care index.

Spending on research and development rose 33% to $631 million in the fourth quarter because of an increase in the number of patients enrolled in clinical trials, the company said. In 2006, Schering's research spending jumped 17% to $2.2 billion.

Among the company's most promising drugs in development is a blood thinner called SCH 530348, which is in the second of three phases of human testing required to get U.S. regulatory approval.

The product may get acceptance as early as 2010 and eventually generate more than $1 billion in sales annually, the company has said.

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