sales of cholesterol drugs helped Schering-Plough post a twofold increase in
quarterly profit this week, but earnings may expose an over-reliance on Vytorin
Boris, an analyst with Bear Stearns, said Schering-Plough needs to lower its
dependence on the cholesterol joint venture, which contributes 78%
of its pretax profits. Boris expects that number to decrease to 71% in 2010 as
the company absorbs sales of products from Organon BioSciences, the biotech
firm it acquired earlier this year. “Another deal is needed to further
diversify,” Boris wrote.
Sales of Vytorin and Zetia rose to $1.3 billion in the
quarter, up 34% from a year earlier. They continue to gain share, despite the
introduction of generic Zocor (simvastatin) from multiple sources late last year.
Pfizer's Lipitor, meanwhile, the best-selling LDL-cholesterol lowering drug, is
and Vytorin are indicated for second-line treatment and tend to be used after failure
of other medications, most often generic simvastatin. “Generally simvastatin
will not get patients to their target goal. So we see very good uptake of Zetia
being added on to existing therapy or patients being switched to Vytorin,”
Carrie Cox, Schering-Plough EVP, president, global pharmaceuticals, said during
Schering-Plough's second-quarter earnings call, according to a transcript from Thomson Street Events.
has also benefited from a shift in clinical practice toward more aggressive LDL
management, Cox said.
But the growth rate for the cholesterol JV is already decelerating,
albeit modestly. Vytorin sales increased 38% to $686 million in the second
quarter, a slower growth rate than in the first quarter and in 2006, according
to The Wall Street Journal.
Schering-Plough CEO Fred Hassan told the Journal
he had anticipated some “moderation” as the two products become established in
And Schering-plough faces growing competition to other key
products, allergy drug Nasonex, arthritis treatment Remicade and hepatitis C
drugs like Peg-Intron, a factor that dampens the outlook for its stock price,
Schering-Plough's partner in the cholesterol JV, Merck, is more
diversified, with other blockbusters in its portfolio, namely rhinitis
treatment Singulair and antihypertensives Cozaar and Hyzaar. Merck also
has more affiliates. Equity income, which reflects income from
and alliances, totaled $759 million in the second quarter, the company
that, the cholesterol partnership contributed $465 million, a 45%
the prior year. The balance of equity income comes from other joint
Merial, Sanofi Pasteur MSD and Johnson & Johnson Merck.