Updated from 10:37 a.m. EDT
Clipped by the fiasco surrounding cholesterol drugs Vytorin and Zetia,
said Tuesday after market close that it will embark on a cost-cutting spree expected to generate up to $1.5 billion in savings.
Kenilworth, N.J.-based Schering-Plough, which has seen shares decline 48% since the start of the year amid cholesterol drug disappointments, will make cuts that account for about 10% of its total 2007 costs.
"The program responds to dramatically intensifying pressures on the pharmaceutical industry, especially new pressures in the United States, and also to the confusion in the U.S. market around cholesterol management that impacts the products of the Merck/Schering-Plough joint venture, Zetia and Vytorin," the company noted in a release.
More than 80% of the cost-cutting program should be achieved by the end of 2010, according to the company, with the remainder put into play by 2012.
CEO Fred Hassan said in the release that the company will not engage in across-the-board cutting and will avoid "unwise short-term actions." However, he also said, "Savings and productivity improvements will be realized across the company and around the world. No area will be exempt."
The company said it will start by making reductions in high-overhead-cost areas, beginning with upper-management levels.
The move comes as a response to the ongoing debate surrounding cholesterol drug Vytorin, which is a combination of Schering's Zetia and a traditional statin. Last week an expert panel recommended doctors avoid prescribing Vytorin until sense is made of data from Schering and partner
Enhance trial. For more details, check out
Investors reacted positively, giving some relief to Schering's shares. The stock was rising 93 cents, or 6.7%, to $14.79 in recent morning trading.
Know What You Own
: SGP operates in the drug manufacturers industry, and some of the other stocks in its field include
. These stocks were recently trading at $54.65, +0.64%, $21.88, +1.02%, $38.51, +0.42%, $51.92, +0.31% and $21.40, -0.51% respectively. For more on the value of knowing what you own, visit TheStreet.com's