Schering-Plough yesterday spotlighted the products it hopes will see it achieve long-term growth, but seemingly failed in its efforts to win over the investment community, and witnessed an almost 3% dip in its stock price on the New York Stock Exchange by close of play – with more than double the normal number of shares changing hands – as perceptions of a weak pipeline continued to plague the company. The firm reportedly told analysts that most of its new offerings coming through will not be launched until 2007-2011.

The news comes just after Fred Hassan, the company’s chairman and chief executive, announced another uplift in profits for the third quarter and pointed to what he termed a major milestone in the transformation of Schering-Plough, “the beginning of the turnaround phase” [[25/10/05b]].

As part and parcel of this, Hassan said Schering-Plough is looking to build a more diverse product mix, through both internal R&D and external licensing/partnering, to strengthen the company’s foundations and support long-term growth. It also plans to focus on extending product lifecycles by investing in new indications, for example the antifungal agent Noxafil (posaconazole) could see an additional filing soon to prevent serious infections in high-risk patients, while its over-the-counter version of the hay fever pill Claritin (loratadine) has seven new line extensions under development.

But what investors were really looking for were new drugs coming through the pipeline to help push S-P out the of the slump it has been in since faltering over government investigations, fines and the loss of patent protection for its one-time blockbuster antihistamine, Claritin. Mr Hassan was appointed in 2003 to turn around the ailing company’s fortunes, and immediately put in place a dramatic restructuring exercise [[22/04/03a]].

Now, having merged its existing research facilities into Schering-Plough BioPharma, and bolstered its capabilities with the acquisition of NeoGenesis Pharmaceuticals [[24/01/05c]], Schering-Plough believes it has access to a broad range of drug discovery technologies that will allow it to better fill its product pipelines. But investors remained relatively unimpressed. At the meeting, it highlighted vicriviroc, a CCR5 receptor antagonist currently in Phase II studies in treatment-experienced patients living with HIV. Similar studies in treatment-naïve patients were terminated, however, after witnessing a return of the virus amongst those given versus those in the control arm [[28/10/05f]].

Also noted was CNTO 148 (golimumab), a fully-human monoclonal antibody being developed with Centocor for rheumatoid arthritis and other immune diseases, and forecast to enter late-stage studies early next year. RA is traditionally an area of immense strength for S-P, which currently markets the highly successful Remicade (infliximab) in this and other indications, with sales jumping 26% to $237 million dollars in the third quarter alone [[25/10/05b]].

Hepatitis C has also been a primary focus for S-P, but its portfolio has suffered since the demise of its Rebetol (ribavirin) to generic competition and with increasing rivalry seen for its newer offering Peg-Intron (peg-interferon alfa 2b). However, it will be hoping that all this will change with the advent of an HCV protease inhibitor in Phase II development. Both this hepatitis C compound and an oral thrombin receptor antagonist for acute coronary syndrome now in Phase II could become billion dollar drugs, says S-P.

But, with such a lukewarm response to its pipeline, Schering-Plough might indeed be left wondering what steps to take next in order to raise the bar and improve its long-term outlook. In a research note from Prudential Equity Group, and reported by Reuters, analyst Timothy Anderson said: “Expectations have been fairly high going into this meeting, but Schering-Plough has not delivered enough ‘oomph’ to get the investment community excited.”