Schering-Plough Says Goodbye to a Brutal Year

Schering-Plough (SGP Quote) put a horrific 2002 out of its misery Thursday, reporting a 19% drop in earnings per share, hurt once again by vanishing sales of its prescription allergy drug, Claritin.

While 2003 isn't looking much brighter for the Kennilworth, N.J-based drug maker, Schering-Plough is trying to clear the decks to make way for a return to earnings growth in 2004.

Fourth-quarter net income totaled $428 million, or 29 cents per share, compared with earnings of $528 million, or 36 cents per share, in the year-ago quarter, which excludes the $500 million consent decree payment made to U.S. drug regulators. Results beats Wall Street's consensus estimate by a penny per share, as polled by Thomson Financial/First Call, but then there wasn't much drama involved here since Schering-Plough issued a profit warning earlier this month.

Sales in the fourth quarter fell 4% to $2.4 billion. Sales of prescription Claritin were wiped completely off Schering-Plough's books in the fourth quarter, as the company decided instead to take a $51 million inventory reserve charge to reflect the faster-than-expected drop in demand for the product. By comparison, prescription Claritin sales totaled $688 million in the fourth quarter 2001.

Claritin is now sold over the counter, with sales totaling $105 million in the quarter. Schering-Plough has also been trying to get Claritin patients to switch to Clarinex, its new prescription allergy drug,, but results have been mixed. Fourth-quarter Claritin sales totaled $176 million.

Schering-Plough's line of PEG Intron hepatitis C drugs posted sales of $817 million in the quarter, up 62% from the year-ago period. The company now faces competition, however, from Roche's recently approved hepatitis C rival, Pegasys, especially since Roche announced that it would price its drugs at a discount to Schering-Plough's products.