Schering-Plough has seen major revenue growth for the first quarter with earnings rising 52% helped by strong demand for its cholesterol drugs Zetia and Vytorin and its arthritis treatment Remicade.
Net income increased to $543 million, or 36 cents a share, from $350 million, or $24 cents a share a year earlier. Excluding charges, earnings would have reached 42 cents a share in the quarter. On this basis, earnings beat analysts forecasts of 29 cents a share.
Overall sales jumped 17% to $2.98 billion, up from $2.55 billion in the same period last year. Schering-Plough splits the revenue from Zetia and Vytorin with Merck & Co, and sales of the cholesterol drugs aren’t included in S-P’s net sales.
“Schering-Plough has now delivered ten consecutive quarters of double-digit adjusted sales growth,” said Fred Hassan, chairman and CEO. “We are growing our core business across all major geographic regions. We have sustained the strength of our cholesterol, respiratory, immunology and oncology franchises. Our animal health and consumer health care businesses are also growing. Our strategy of growing the top line while maintaining financial discipline is clearly paying off.”
The top nine products in S-P’s portfolio boosted sales by at least 10%. The cholesterol joint venture sales from Vytorin and Zetia generated $616 million and $544 million respectively, showing a 48% increase over the same period last year and netting a total of $1.2 billion, which is split jointly with Merck & Co.
In the area of cardiovascular treatment the company is “emerging as a leader, both in the marketplace and in clinical research”, Hassan said, adding that Zetia had just been approved for use in Japan.
Sales of Remicade increased 34% to $373 in the first quarter, driven by growth across all indications. Remicade is a treatment for immune-mediated inflammatory disorders that S-P markets in countries outside the US (except Japan and certain other Asian markets) for rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis. plaque psoriasis, Crohn’s disease and ulcerative colitis.
Revenues from allergy drugs also gained, with Nasonex up 24% to $284 million, Claritin up 11% to $112 million and sales of Clarinex, a newer, slightly altered version of Claritin growing by 28% to $204 million. While sales of Temodar, a treatment for certain types of brain tumours, rose 20% to $196 million, as a result of continued use in Europe for treating newly diagnosed glioblastoma multiforme, which is the most prevalent form of brain cancer.
Among other products boosting sales was the antibiotic Avelox, up 43% to $115 million, and Pegintron for hepatitis C, with an increase of 10% to $217 million.
Momentum in R&D
Hassan said S-P is also “gaining momentum in R&D”, pointing to recent Phase II results for its novel antiplatelet therapy TRA which met its primary endpoint by demonstrating no increase in major and minor bleeding when added to standard antiplatelet therapy. The company also announced on April 18 that it is planning two large Phase II trials for TRA, with patients expected to begin treatment in the trials later this year.
S-P has also been developing its business through an active licensing campaign. Last month it concluded an agreement with Merck to develop an ezetimibe (Zetia) and atorvastatin fixed-dose combination medicine for lowering cholesterol, which could further benefit Zetia sales. The company has also in-licensed AN2690 from Anacor Pharmaceuticals for the treatment of nychomycosis, and sublingual tablet-based immunotherapies for various allergies. And just five weeks ago it bought Organon BioSciences a move about which Hassan said, “we are even more convinced that this is the right deal”.
Organon generated $6.4 billion last year in sales of animal health products and drugs such as the birthcontrol pill Marvelon and the implantable contraceptive Implanon. Only Bayer and Johnson & Johnson sell more birth-control products. Organon also has five products in late-stage clinical testing. Combining overhead costs of the two companies will save at least $500 million over the next three years, Hassan said.
S-P expects sales growth to moderate for the remainder of the year as certain products face increased competition. Spending on research is also expected to continue to outpace increases in sales this year.