Schering-Plough Posts a Loss

Schering-Plough (SGP) suffered a disappointing second-quarter, missing Wall Street estimates by a penny because of slumping sales of its biggest products in the U.S.

Schering-Plough announced a second-quarter net loss of $65 million, or 4 cents a share, which is worse than the net income of $182 million, or 12 cents a share, it had a year ago.

Excluding an $80 million upfront payment to license an antibiotic and a $42 million charge for employee termination costs, the company had a loss of $27 million, or 2 cents a share, which is a penny worse than the Wall Street consensus.

"Second-quarter results are consistent with the tough financial comparisons we expected for 2004," said Fred Hassan, Schering-Plough chairman and CEO. "While we still expect 2004 to be a difficult year and for earnings -- excluding unusual items -- to be below those of 2003, we are also starting to see some early signs of sequential stabilization vs. the prior quarter."

The company said net sales came in at $2.15 billion, slightly better than the $2.06 billion expected by analysts, but a 7% drop from the $2.3 billion it had a year ago. Sales in the U.S. and prescription pharmaceutical sales were weak, with U.S. consolidated sales dropping 21% year-over-year and prescriptions falling 12%.

The prescription pharmaceutical sales were affected by a big drop in sales of Peg-Intron and Rebetol, the company's two Hepatitis C treatments, because of increased competition. Schering-Plough said sales of Rebetol came in at $88 million, off 55% year-over-year, while sales of Peg-Intron came in at $144 million, down 42%.

As with the Hepatitis C treatments, the company's allergy treatments have faced increased competition, especially in the U.S. Clarinex sales came in at $226 million, up 3%, driven by sales outside the U.S. and conversions from prescription Claritin. Sales of Nasonex came in at $156 million, off 11% and losing market share in the U.S.

Cholesterol treatments were the company's strongest franchise in the second quarter, with sales coming in at $247 million, nearly double the year-ago period, driven by strong sales of Zetia and Vytorin, which is not yet available in the U.S.

"We are looking forward to the U.S. approval and launch of our cholesterol-lowering agent Vytorin, which will offer patients a powerful new treatment option for high cholesterol," said Hassan, adding later: "We have said that Vytorin will be pivotal to achieving our anticipated turnaround beginning in 2005, so its U.S. approval will mark an important event for this company."

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