Big Pharma Takes Another Hit
Schering-Plough Corp., the maker of the Vytorin and Zetia cholesterol pills, said first-quarter profit fell 48 percent, less than analysts expected, on costs for acquiring Organon Biosciences NV.
Profit excluding some items was 53 cents a share, beating analysts’ estimates by 15 cents and boosting shares the most in almost three weeks in New York trading. Net income for the quarter was $291 million, or 15 cents a share, the Kenilworth-based company said Wednesday.
Revenue jumped 57 percent with the addition of the Organon products. The $16 billion purchase aims to reduce Schering’s dependence on Zetia and Vytorin, the company’s best-selling products. U.S. sales slowed after a January study questioned their benefit, and Chief Executive Officer Fred Hassan repeated Wednesday that the company was cutting 5,500 jobs as a result.
“The added visibility from the Organon acquisition and cost-cutting are necessary, welcome and helpful,” said Deutsche Bank analyst Barbara Ryan in a note to investors. “Schering-Plough is no longer a growth story but a cost-cutting one.”
Organon is the world’s third-largest maker of birth-control products, including the contraceptive devices Nuvaring and Implanon. Schering-Plough bought Organon, a unit of Amsterdam-based chemical maker Akzo Nobel NV, in November and the deal added four cents to earnings in the first quarter.
Shares of Schering-Plough (SGP) have fallen 31 percent this year.
In the year-earlier quarter, Schering-Plough recorded net income of $565 million, or 36 cents a share. The drugmaker hasn’t forecast earnings for more than five years.
Revenue for the quarter rose to $4.7 billion from $3 billion as sales of the rheumatoid arthritis treatment Remicade increased 36 percent to $507
