Schering-Plough's Profit Drops 29%

Third-quarter profit at Schering-Plough(SGP Quote) fell 29% on foundering sales of the allergy drug Claritin, but then, investors expected this after the drugmaker's controversial earnings warning issued earlier this month.

The Kenilworth, N.J.-based drugmaker officially slashed earnings forecasts for 2002 and 2003 in a late-night press release posted Oct. 4, capping three days of rumor and uncertainty that erased 17% from the company's stock price. But it was later learned that Schering-Plough Chief Executive Richard Kogan met privately with fund managers and analysts in the days before and during the stock's selloff, a matter now under investigation by the Securities and Exchange Commission.

Thursday, the company reiterated its reduced outlook, forecasting flat 2002 earnings with the $1.58 per share earned last year, and 2003 earnings in the range of $1.00 to $1.15 per share.

Schering-Plough earned $429 million, or 29 cents a share in the third quarter, compared with earnings of $601 million, or 41 cents a share, in the year-ago period. Results beat reduced Wall Street consensus estimates by a penny a share, as polled by Thomson Financial/First Call. Before the company's warning, analysts were looking for third-quarter earnings of 35 cents a share.

Third-quarter sales rose 2% to $2.4 billion, slightly above Wall Street expectations. Higher overall sales, however, were offset by higher costs. At the top of company's trouble list is the allergy drug Claritin, which recorded a 51% drop in third-quarter sales to $402 million. Claritin sales were hurt as wholesalers cut inventory levels in anticipation of the entry of generic competition in December.