Schering-Plough Posts $3.4B Loss

NEWARK, N.J. -

The drugmaker Schering-Plough said Tuesday it lost $3.36 billion in the fourth quarter of 2007 because of accounting adjustments related to the purchase of Organon BioSciences NV.

But its results excluding the accounting items topped Wall Street estimates and its shares rose more than 4 percent in morning trading.

Kenilworth-based Schering-Plough Corp. said the loss, which amounted to $2.08 per share for the three months ended Dec. 31, compared with a profit of $182 million, or 12 cents per share, a year earlier.

Without the accounting adjustments, Schering-Plough said it would have had a profit of 27 cents per share in the quarter. Analysts expected earnings without items of 24 cents per share, according to Thomson Financial.

Quarterly revenue rose 40 percent to $3.72 billion from $2.65 billion a year ago and exceeding analyst estimates of $3.1 billion.

The company reported double-digit sales increases in each of its three segments, prescription pharmaceuticals, consumer health care and animal health.

"Schering-Plough delivered another strong performance in both the fourth quarter and full year of 2007," Chairman and CEO Fred Hassan said.

Its shares rose $1.21, or 5.9 percent, to $21.83.

In a conference call with analysts, Hassan and other executives defended its joint venture involving cholesterol drugs Vytorin and Zetia. They acknowledged that U.S. weekly prescriptions have dipped since Jan. 14, when partial results of a study found Vytorin was no more effective at limiting plaque buildup than one of its components, Zocor, now available as an inexpensive generic drug. Vytorin did lower bad cholesterol levels a bit more.

Schering-Plough, which markets Vytorin with Merck & Co. of Whitehouse Station, stands "behind our products and we stand behind our science," Hassan said.

Patients have been exposed to misleading information from a small study that used ultrasound imaging, Hassan said, adding, "The doctors generally knew this was a media-driven situation."

Vytorin remains under study, and Hassan said it is too soon to estimate the impact of the Vytorin matter on the company. However, "We stand ready to take tough actions if tough actions are needed."

The study results triggered potential class-action lawsuits, alleging the companies misled consumers into thinking the drugs were more effective than generics.

Studies have shown Vytorin and Zetia significantly lower LDL, or bad cholesterol, along with a healthy diet.

Vytorin combines Schering-Plough's Zetia and Merck's Zocor. Schering-Plough said the joint venture's fourth-quarter net sales were $1.4 billion, compared to $1.1 billion for the same 2006 period. For 2007, joint venture net sales were $5.1 billion, compared to $3.8 billion in 2006.

The Dutch biopharmaceutical Organon was acquired in November for about $14.43 billion in cash, allowing Schering-Plough to expand its late-stage product pipeline and human health business.

"Today, we are a much stronger and more diverse company than ever before, and we are better positioned to deal with the new challenges confronting us in 2008," Hassan said.

Key profit drivers for Schering-Plough include the arthritis treatment Remicade and the allergy treatment Nasonex. Quarterly Remicade sales rose 35 percent to $455 million, while Nasonex sales rose 7 percent to $271 million.

For the full year, Schering-Plough reported a loss of $1.59 billion, or $1.04 a share, compared to a profit of $1.06 billion, or 71 cents a share, for 2006. Revenue for 2007 rose 20 percent to $12.69 billion, surpassing analyst expectations of $12.07 billion.