Things are looking up for US drugmaker, Schering-Plough, as the firm posted an increase in profit for the third consecutive quarter after a long spate of disappointing performances and setbacks.
Robust sales in the period helped the group boost profits by a third, signifying that it has passed the recovery stage and is now firmly on the way to building a more successful future. “We are announcing a major milestone in the transformation of Schering-Plough - the beginning of the turnaround phase,” claimed chief executive Fred Hassan, who joined the group in 2003 at a time when it faced serious challenges [[22/04/03]].
The firm generated earnings of $43 million, or $0.03 a share, for the quarter, a far cry from the $14 million, or $0.01 a share, posted for the year-ago period [[22/10/04d]]. Furthermore, after a charge for a research and development payment and a favourable tax impact, S-P's earnings amounted to $0.08 per share, beating analysts' consensus estimate by 2%.
Total revenues for the period grew a steady 15% to $2.3 billion, largely driven by strong sales of the cholesterol-busters Vytorin (ezetimibe/simvastatin) and Zetia (ezetimibe), which are marketed under a joint venture with Merck & Co. These generated sales of $616 million versus $340 million for like, year-earlier period, of which S-P saw its share rocket 216% to $215 million.
Aside from its cholesterol franchise, seven of S-P's top 10 prescription drugs turned in double-digit sales growth: Remicade (infliximab), for rheumatoid arthritis and Crohn's disease, leapt 26% to $237 million; the brain tumour drug, Temodar (temozolomide), up 25% to $152 million; and the antihistamine Nasonex (mometasone furoate monohydrate) climbing 11% to $170 million.
According to Mr Hassan, the group is now beginning a turnaround phase after "bold action to stabilise and repair" the business effectively “halted a downward spiral of performance.” The turnaround phase is the third of five that make up the six-to-eight year action plan announced by Mr Hassan at the start of his tenure [[23/04/03b]], and this particular portion is expected to run for 12 to 18 months. Actions to strengthen the group's infrastructure, systems and business practices launched in earlier phases are set to continue.
In terms of business aims, Mr Hassan commented: “Our first goal is to continue to deliver solid top-line sales growth which, when supported by continuing overhead cost-containment and reinvestment, would drive bottom-line earnings growth for the long term. Our second goal is to set the foundation for the fourth phase in our action agenda - the 'build the base' phase. During this phase, we will be focused on developing breadth and depth across the company - including in our pipeline and product portfolio."
But investor enthusiasm seemed slightly muted, as S-P's New York Stock Exchange-traded shares closed up just $0.02 at $21.13 on October 24, although this could be a mere reflection of the fact that results were largely in line with expectations.
In other news, S-P released results of a new clinical study showing that, in patients with graft-versus-host disease, its investigational antifungal agent Noxafil (posaconazole) significantly cut the incidence of aspergillosis, as well as serious invasive fungal infections, compared to Pfizer's Diflucan (fluconazole.) In addition, the data demonstrated that the agent was well tolerated.