Shares of Schering-Plough Corp. (NYSE: SGP) and Merck & Co. (NYSE: MRK) were obliterated today after a major study cast doubt on the effectiveness of their cholesterol-fighting drugs Vytorin and Zetia.Schering-Plough fell $5, nearly 26%, to $14.47 in early afternoon trading while Merck plunged $6.67, or 15%, to $37.84. As the New York Times and other media outlets noted, the news from the American College of Cardiology couldn't have been much worse for investors.
A scientific panel said the drugs failed to slow the growth of plaques in arteries associated with heart attacks and strokes. It also urged physicians and patients to "rely more heavily on older cholesterol-lowering drugs called statins, which have proven benefits and can be cheaper," according to the Times.
For Schering-Plough, the results are potentially devastating because both drugs account for about 70% of the company's profit, according to analysts' cited by the paper. You have to wonder how much longer Schering-Plough can remain independent.
About the only winners from this mess are the media companies. Those annoying commercials for the drugs helped fatten their bottom lines during a period of uncertain consumer spending. If the companies have any hope of salvaging these products, they are going to need to open up their checkbooks and buy lots and lots of advertising.
Freelance journalist Jonathan Berr writes and edits the blog Ketchup and Eggs.
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Reader Comments (Page 1 of 1)
3-31-2008 @ 5:51PM
NewsVisual said...
In news that could devastate the profit margins for Merck & Co Inc for years, a panel of cardiologists warned doctors that they should stop prescribing the company’s cholesterol-lowering drugs, Vytorin and Zetia. Merck jointly markets these two drugs with Schering-Plough Corp. "Until recently, both Merck and Schering-Plough had staged turnarounds that relied partly on sales and profit growth from Vytorin and Zetia. Now, future growth is in serious doubt," The Wall Street Journal reported on Monday in an online article. Merck’s Board of Directors now must step up to the plate and be prepared to advise the company’s Senior Executives on finding a path for securing its strategic position in the competitive marketplace.