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Drugmaker Schering-Plough Corp. (NYSE: SGP) reported this morning a drop of 48% in its fiscal first-quarter profit, hurt by higher costs tied to a buyout in the prior quarter. However, the company was able to post adjusted earnings well above analysts' predictions, pushing its shares up in morning trading.
Schering-Plough's profit during the first-quarter plunged to $291 million, or 15 cents a share, dragged down by charges related to its acquisition of Organon Biosciences NV. Excluding items, Schering-Plough's earnings figures would have come at 53 cents per share. Analysts' forecasts (which typically exclude one time items) were for 37 cents per share in the quarter.
The company's quarterly revenue jumped by a respectable 57% to $4.66 billion. For the period, the company benefited from strong gains from Organon, which came with sales of $1.3 billion. Anti-inflammatory Remicade sales also saw a growth of 36%, while allergy treatment Nasonex revenue saw a rise of 8%. Higher drug prices offset lower prescriptions in the U.S. Analysts, on average, expected Schering-Plough's revenue to be $4.52 billion, according to Thomson Reuters.
As for results from its joint venture with Merck & Co. (NYSE: MRK), the drugmaker may see its drug sales falling this year, a Goldman, Sachs & Co. analyst stated. This came after panelists at a meeting of cardiologists in Chicago last month said doctors should use Vytorin or Zetia, marketed by the companies' joint venture, only as a last alternative.
This was bad news for the company and its stock-price has been falling in reaction. As a result, Schering-Plough decided to eliminate jobs and close plants to save $1.5 billion a year. Merck also has a gloomy outlook as warned it expects to see losses of $700 million this year from its share of the Vytorin and Zetia income.
For the moment though, traders weren't disappointed by the pessimistic analyst's comments. The market didn't react to the negative forecast and the stock has surged over 6% to $18.25 in early trading.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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