Acquisition costs more than halved Schering-Plough's bottom line in the first quarter, but the company -- embroiled in a cholesterol drug debate -- managed to beat Wall Street estimates on an adjusted basis.

Shares of the Kenilworth, N.J.-based company, which have dropped nearly 35% since the beginning of 2008, rose 98 cents, or 5.6%, to $18.11 Wednesday.

For the first quarter, Schering reported net income of $253 million, or 15 cents a share, on a GAAP basis, down from $543 million, or 36 cents a share, in the year-ago quarter.

Excluding one-time items and charges related to the acquisition of Organon BioSciences, Schering reported adjusted quarterly profit of 53 cents a share, vs. 42 cents in the 2007 period.

Analysts surveyed by Thomson Financial had pegged 37 cents a share, on revenue of $4.52 billion.

Surpassing expectations, sales rose 56% to $4.7 billion, year over year, driven by the OBS acquisition and a favorable foreign-exchange rate.

The company recorded $723 million in animal health sales and $377 million consumer health care sales, which saw a 9% increase. Global Pharmaceuticals -- including $861 million in sales from OBS -- contributed $3.6 billion to Schering's revenue.

Sales of Remicade, a treatment co-marketed with Johnson & Johnson ( JNJ - Get Report) for inflammatory diseases such as rheumatoid arthritis, climbed 36% to $507 million. Also, sales of brain tumor treatment Temodar grew 20% to $236 million. And sales of allergy treatment Nasonex grew 8% to $307 million, increasing in sales in the international markets but decreasing in the U.S., according to the company.

Sales from Merck ( MRK - Get Report) and Schering's cholesterol joint venture totaled $1.2 billion. Schering-Plough records its share of the income from operations in "equity income," which totaled $517 million in the 2008 first quarter, an increase of 6%, vs. $487 million in the first quarter of 2007.

The pair's Vytorin, a combination of Zetia plus a traditional statin, has been the center of an ongoing controversy ever since data from the Enhance trial revealed Vytorin, which is shown to reduce "bad" LDL cholesterol, failed to reduce arterial plaque that leads to heart attacks. Earlier in April, an expert panel recommended doctors avoid prescribing Vytorin until sense is made of data from the Enhance trial.

Schering has since announced a $1.5 billion cost-cutting plan. More than 80% of that plan should be achieved by the end of 2010, with the remainder put into play by 2012.

"The OBS acquisition is already contributing to our results and adding long-term value. Our geographic expansion strategy is broadening our base. Our company is now much stronger to deal with new challenges, such as those facing the Merck/Schering-Plough cholesterol business in the United States," said Fred Hassan, Schering's CEO, said in the company's earnings release Wednesday.

Looking ahead, analysts surveyed by Thomson Financial are looking for $1.43 a share on revenue of $18.3 billion for full-year 2008.

GlaxoSmithKline ( GSK - Get Report), another drugmaker that posted quarterly results Wednesday, was trading up 1.8% at $44.53. Meanwhile, biotech stocks Amgen ( AMGN - Get Report) and ImClone ( IMCL), set to release earnings on Thursday, were up 1.4% and 2.5%, respectively.