Schering-Plough's Adjusted Profits Top Estimates
02/12/08 - 02:56 PM EST
Robert Steyer
Even without the test controversy, analysts say the cholesterol drugs' growth rate will decline due to competition from brand-name drugs and, more importantly, generic versions of other cholesterol drugs. Merck's Zocor has been generic since mid-2006, and many health maintenance organizations are encouraging patients to start on, or switch to, the cheaper drug vs. brand-name medications.
A tougher test will come when Pfizer's(PFE Quote - Cramer on PFE - Stock Picks) Lipitor loses its U.S. patent protection. Lipitor could go generic in early 2010, although Pfizer is trying to keep the drug protected until mid-2011. Analyst Barbara Ryan says a "primary downside risk" to Schering-Plough is the "sustained weakness" of the joint venture, while an "upside risk" is "a transient, modest decline in growth of the joint venture." She told her Deutsche Bank clients on Tuesday she is keeping a hold rating and a 12-month price target of $24. She doesn't own shares, but her firm has had a noninvestment banking relationship. Jami Rubin, of Morgan Stanley, also forecasts uncertainty for the cholesterol franchise, but she belongs to the majority of analysts who are Schering-Plough bulls. She told clients that the fourth quarter's "solid" performance caused her to keep an overweight rating. She doesn't own shares, while her firm has had a recent investment banking relationship. The Vytorin controversy obscured the results over the "other" Schering-Plough, for which many big-selling drugs yielded double-digit sales gains in the fourth quarter. Remicade, for inflammatory diseases such as rheumatoid arthritis, produced $455 million, up 35% from the fourth quarter of 2006. Schering-Plough sells the drug outside the U.S. (excluding Japan and several other Asian countries), while Johnson & Johnson(JNJ Quote - Cramer on JNJ - Stock Picks) handles the U.S. market. Sales of PEGintron for hepatitis C rose 15% to $239 million, and sales of Temodar for certain brain tumors gained 23% to $234 million. The inhaled nasal allergy drug Nasonex grew 7% to $271 million. Consumer health products rose 24% to $254 million, while animal-health products jumped 117% to $507 million thanks, in part, to contributions from Organon's animal-drug business.
RSS
