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Apr-23-2008

Glaxo, Schering, Merck KGaA First-Quarter Profit Beat Estimates

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The answer? Sales were up 6% over the first quarter last year, which, while not bad, pales in comparison to the 34% year-over-year increase that the cholesterol drugs managed in the pre-Enhance fourth quarter. (More...)
The program targets annual savings from of $1.5 billion, which represents approximately 10 percent of the company's full-year 2007 estimated cost base. (More...)
Schering-Plough rose $1.02, or 6 percent, to $18.16 at 12:45 p.m. in New York Stock Exchange composite trading. (More...)
Shares of Ambac Financial Group Inc. were down 19% after the bond insurer barfed out a terrible earnings report, writing down $1.73 billion in collateralized-debt-obligation losses and an additional $1.04 billion in loss provisions. (More...)
As previously disclosed, the equity income guidance already included the impact of the reduction of the AZLP priority return and the buyout of the Astra USA products which occurred in March 2008. (More...)
Duval has been granted options to purchase 300,000 common shares of the company at an exercise price of $0.16 per share, pursuant to the terms of the company's Stock Option Plan. (More...)
Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. (More...)
Schering-Plough paid about $16 billion in November for Organon, a unit of Amsterdam-based Akzo. (More...)
The mean estimate of analysts polled by Thomson Financial was for 37 cents a share. (More...)
Cognet-X first surveyed managed care executives during the week of Jan. 14, 2008, when preliminary ENHANCE data were released. (More...)
Sales actually grew by a whopping 57 percent--but that was due to the inclusion of Organon's products. (More...)

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The answer? Sales were up 6% over the first quarter last year, which, while not bad, pales in comparison to the 34% year-over-year increase that the cholesterol drugs managed in the pre-Enhance fourth quarter. All the growth was outside the U.S.; sales of both drugs were down year over year in the States. Adding the small Schering gain onto the other joint ventures, like its vaccine partnership with Sanofi-Aventis (NYSE: SNY ), resulted in a 13% year-over-year gain in income from joint ventures. That income, combined with a little cost-cutting, helped Merck turn that aforementioned 1% increase in sales into an almost 6% gain in adjusted earnings per share after subtracting out restructuring charges, as well as the $1.4 billion after-tax distribution from AstraZeneca (NYSE: AZN ) as the companies slowly dissolve their partnership. Merck thinks it should still be able to make its previous earnings-per-share guidance, although the company is shifting regarding where it expects to make the money from. The weak dollar should help boost international sales a little, while the company lowered expected sales to AstraZeneca by $200 million and lowered its expected income from its partnerships by $700 million, thanks to the lower sales of cholesterol drugs. [1] "We anticipate that the confusion in the marketplace (over the study results) will cause sales of Vytorin and Zetia to be significantly lower than expected for the entire year," Merck's chairman and chief executive officer, Richard T. Clark, told analysts Monday. Because of that, he said Merck has lowered its expected 2008 income from that joint venture by $700 million. The company said it expected its blood pressure drugs Cozaar and Hyzaar, as well as other products, to pick up the slack. It reaffirmed its earnings forecast for the year of $3.28 to $3.38 per share, excluding about 60 cents worth of one-time items. Merck said that as of March 31, more than 45,000 former Vioxx users who suffered a heart attack or ischemic stroke and are eligible for its global settlement have at least started the enrollment process, keeping the settlement process on track.[2] "Merck posted solid first-quarter results despite the loss of patent protection for Fosamax, as well as a decline in expected sales from our Merck/Schering-Plough joint venture," Merck's chairman and chief executive officer, Richard T. Clark, said in a statement. The company reaffirmed its earnings forecast for the year of $3.28 to $3.38 per share, excluding about 60 cents worth of one-time items.[3]

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.[4] Revenues reached $4.66 billion, up 56 percent from $2.98 billion in the first three months of 2007. They included $1.3 billion from sales of Organon BioSciences products. Schering-Plough said its revenues totaled $5.3 billion, including its share of the $1.2 billion in revenues from its joint venture with Merck & Co. selling cholesterol drugs Vytorin and Zetia, revenues totaled $5.3 billion.[5] Overall, Schering-Plough shares in approximately 50 percent of the profits of the joint venture with Merck, although there are different profit-sharing arrangements for the cholesterol products in countries around the world. 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 percent versus $487 million in the first quarter of 2007. Schering-Plough noted that it incurs substantial costs such as selling, general and administrative costs that are not reflected in "Equity income" and are borne by its overall cost structure.[6]

NEW YORK (Reuters) - Schering-Plough Corp (SGP.N: Quote, Profile, Research ), whose stock has been battered this year by a failed trial of its Vytorin cholesterol drug, reported a quarterly profit well above Wall Street forecasts thanks to cost controls, lifting shares 5 percent. First-quarter net income available to holders of its common stock was $253 million, or 15 cents per share, down from $543 million, or 36 cents per share, a year earlier.[7] 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. 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.[4] Excluding acquisition costs and other one-time items, the company said it would have reported earnings of $862 million, or 53 cents per share. Those items included $688 million in accounting adjustments and another $23 million in charges related to its November acquisition of biotech company Organon BioSciences.[5]

Excluding about $690 million in acquisition-related costs and some other one-time items, Schering-Plough said it would have reported earnings of $862 million, or 53 cents per share. That beat by 16 cents the forecast of analysts surveyed by Thomson Financial who expected 37 cents per share, excluding one-time items.[8] Analysts surveyed by Thomson Financial were expecting earnings of 86 cents per share, a figure that generally excludes one-time items, but had forecast higher revenues of $6.11 billion. Its shares rose 21 cents to $66.72 in premarket trading. Merck, which is in the process of settling massive litigation over its withdrawn painkiller Vioxx, got hit with some new problems during the quarter. Its osteoporosis treatment Fosamax, which had been the leading drug in the category and one of Merck's top sellers, got new generic competition.[3] Seven Wall Street analysts expected revenues of $137.49 million for the quarter. Looking forward, for the full-year 2008, the company said it remains confident to achieve its forecast of at least $891.4 million in net sales, $93.6 million in net income and $2.91 earnings per share.[9] When including the $1.4 billion after-tax gain from the AstraZeneca partnership, earnings were $1.52 per share, nearly double the 78 cents per share seen in the same period last year. The company said its net income was $3.3 billion, compared to $1.7 billion in the first quarter of 2007.[10] Merck reported quarterly profit of $3.3 billion, or $1.52 a share, compared with $1.7 billion, or 78 cents a share, for last year's first quarter. Excluding a $1.4 billion tax gain the company received as a result of its partnership with AstraZeneca, earnings amounted to 89 cents a share.[11] Merck reported non-GAAP (generally accepted accounting principles) earnings per share (EPS) of $0.89 for the first quarter of 2008, excluding a $1.4 billion net aftertax gain from a distribution received from the AstraZeneca limited partnership and restructuring charges.[12]

The latest quarterly results included a $1.4 billion gain from a distribution received from Merck's partnership with AstraZeneca, plus restructuring charges. Excluding these, earnings were 89 cents a share, ahead of the mean estimate of analysts surveyed by Thomson Financial of 86 cents a share. Under their longstanding partnership, Merck shares in the proceeds of certain products marketed by AstraZeneca, including the blockbuster heartburn drug Nexium.[13] Revenues were below analyst expectations of $6.1 billion, according to Thomson Financial, while profit was well above expectations of $1.8 billion. Merck reafirmed its earnings guidance for the year of $3.28 to $3.38 per share, excluding certain items.[14]

Vytorin combines Zetia and Zocor. Despite controversy over whether the companies delayed releasing the results to protect sales, including ongoing congressional probes, overseas sales jumped 44 percent and amounted to nearly one-third of their total $1.2 billion in first-quarter revenues. Counting Schering-Plough's share, its revenues totaled $5.3 billion. Hassan told analysts the company is on track with its plan to cut annual costs by $1.5 billion by 2012, announced earlier this month. About 10 percent of its 55,000 jobs are to be cut. "They will start soon, some this quarter, some next quarter," he told the AP, adding that changes to integrate Organon already have begun.[8] The company also reserved $40 million for legal defense costs amid about 940 lawsuits alleging the drug damaged jaw bone in some patients. Merck and New Jersey neighbor Schering-Plough Corp., which have a profitable partnership selling cholesterol drugs, got a black eye when congressional investigators and some doctors alleged that to protect sales of their blockbuster drug Vytorin, the companies delayed releasing negative study results expected to significantly hurt revenues. When the full results were finally released last month, nearly two years after the study ended, they showed Vytorin was no better than generic Zocor at reducing plaque buildup to neck arteries.[2] First off, the company expects to lose some $700 million in revenues off the blockbuster cholesterol drug, which has been dropping off, scrips-wise, since the big Enhance announcement in January (you remember all that news ). This is the first time we've seen a real number applied to the potential sales slide. That figure might help a savvy prognosticator ballpark lost sales at Schering-Plough, which reports its earnings tomorrow; Schering is Merck's partner on Vytorin, a combo of Merck's Zocor statin and Schering's cholesterol-lowering Zetia pill.[15] Merck's ( MRK, Fortune 500 ) sales edged up 1% to $5.8 billion in the first quarter, falling short of analyst expectations of a 6% gain to $6.1 billion. This is partly because sales from the bone disease treatment Fosamax, which lost patent protection, dropped 37% to $470 million. Merck said that sales for its battered cholesterol combo Vytorin, and for the cholesterol drug Zetia, rose 6% to $1.2 billion. Merck splits these sales with its partner Schering-Plough ( SGP, Fortune 500 ). The sales gain is in spite of a Jan. 14 study from Merck and Schering saying that Vytorin is no more effective in reducing arterial plaque than its generic ingredient simvastatin.[10] U.S. prescriptions for Vytorin fell 7 percent and Zetia fell 10 percent in the first quarter after a study showed Vytorin, a combination of Zetia and Merck's Zocor, worked no better than Zocor alone. Sales of the drug are likely to decline this year after a panel of doctors said on March 30 at a meeting of cardiologists in Chicago that the medicines should be used only as a last resort. Goldman, Sachs & Co. analyst Jim Kelly said sales of the two drugs, which reached more than $5 billion last year, may fall by 24 percent this year and 20 percent next year.[16]

Sales of Vytorin rose 4% to $651 million, while Zetia climbed 7% to $582 million. In March, a panel of cardiologists recommended that colleagues limit their use of the popular cholesterol-lowering drugs after the January clinical study. Merck - which only records profits from its Schering-Plough venture, and not revenue - lowered the equity income expected in 2008 from the venture to a range of $2.3 billion to $2.6 billion, from its previous guidance of $3 billion to $3.3 billion.[17] Merck & Co.' s (MRK) first-quarter net income nearly doubled, helped by a $1.4 billion gain from its limited partnership with AstraZeneca PLC (AZN), offsetting the drug giant's slightly disappointing total sales. The pharmaceutical company maintained its 2008 outlook, despite lowering the equity income expected from its Vytorin joint venture with Schering-Plough Corp. (SGP) by $700 million.[17] First-quarter 2008 worldwide sales of VYTORIN, marketed outside the United States as INEGY, were $651 million, an increase of 4 percent compared with the first quarter of 2007. The Company records the results from its interest in the Merck/Schering-Plough joint venture, which totaled $393 million in the first quarter of 2008 compared with $347 million in the same quarter a year earlier, in equity income from affiliates.[12] Worldwide sales of vaccines, as recorded by Merck, were $986 million for the first quarter compared with $903 million in the first quarter of 2007. Vaccines in most major European markets are sold through the Company ' s joint venture, Sanofi Pasteur MSD, and the results from its interest in the joint venture are recorded in equity income from affiliates.[12]

Including an adjustment of an assumed 50 percent of the global cholesterol joint venture net sales, Schering-Plough's adjusted sales for the 2008 first quarter would have been $5.3 billion. Reviewing results of the recent quarter, Hassan said the company recorded good growth from many of its leading prescription, animal health and consumer products, with strong growth in international markets partially offset by slower sales growth in the United States.[18] NOTE: Additional information about U.S. and international sales for specific products is available by calling the company or visiting the Investor Relations Web site at http://ir.schering-plough.com/. SCHERING-PLOUGH CORPORATION Reconciliation of Non-U.S. GAAP Financial Measures Adjusted net sales, defined as net sales plus an assumed 50 percent of global cholesterol joint venture net sales. (Dollars in millions) Three months ended March 31 (unaudited) 2008 2007 % Net sales, as reported a/ $4,657 $2,975 56% 50 percent of cholesterol joint venture net sales b/ 607 575 6% Adjusted net sales b/ $5,264 $3,550 48% a/ Net sales for the three months ended March 31, 2008 include sales from Organon BioSciences (OBS), which was acquired on November 19, 2007. b/ Total net sales of the cholesterol joint venture for both the three months ended March 31, 2008 and 2007 were $1.2 billion.[6]

Global cholesterol joint venture net sales, which include VYTORIN and ZETIA, totaled $1.2 billion in the 2008 first quarter. Schering-Plough does not record sales of its cholesterol joint venture with Merck as the venture is accounted for under the equity method.[18] Including an adjustment of an assumed 50 percent of the global cholesterol joint venture net sales, Schering- Plough's adjusted sales for the 2008 first quarter would have been $5.3 billion.[6]

Combined worldwide sales of ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), as reported by the Merck/Schering-Plough joint venture, were $1.2 billion for the first quarter of 2008, representing a 6 percent increase compared with the first quarter of 2007.[12] The company's primary profit engine - the joint venture with Merck & Co. (MRK) to market cholesterol drugs Vytorin and Zetia - is sputtering. Sales of the drugs slowed in the first quarter due to the release of a study that raised questions about their effectiveness.[19] "Merck posted solid first-quarter results despite the loss of patent protection for Fosamax, as well as a decline in expected sales from our Merck/Schering-Plough joint venture." Late last month, Merck and Schering-Plough (nyse: SGP - news - people ) shares were hammered after a long-delayed study was released that cast doubts on the efficacy of their blockbuster cholesterol drugs Vytorin and Zetia.[14]

Neither company records sales from the venture, but financial results are reflected in each company's equity income. Before this year, Merck had pulled off an impressive turnaround from a series of challenges such as the 2004 withdrawal of pain drug Vioxx from the market, through cost cuts and launches of several new drugs and vaccines. The Vytorin and Zetia sales slowdown has put a dent in its outlook, and Merck shares have plunged more than 30% year-to-date.[13]

Sales of anti-hypertension drugs Cozaar and Hyzaar rose 6% to $847 million. Merck hopes to get regulatory approval this year for new products and new uses for existing products. CEO Clark said the company continues to expect FDA action this month on Merck's proposed new cholesterol drug Cordaptive. Some analysts believe the FDA will approve the drug, but it's possible the agency will ask for more data or extend its review.[13] WHITEHOUSE STATION, New Jersey (AP) - The drugmaker Merck & Co. says its profit almost doubled in the first quarter due to a $1.4 billion ('890 million) distribution from a partner drug company. It sales were slightly higher.[20] TRENTON, N.J. (AP) — The drugmaker Merck & Co. on Monday reported that its profit almost doubled in the first quarter due to a $1.4 billion distribution from a partner drug company. Its sales were slightly higher than a year ago.[3]

A collection of new medicines helped Merck produce a profit in the first quarter despite the loss of market exclusivity for a top-selling osteoporosis drug and the controversy over Vytorin, which the drugmaker said could cost as much as $700 million in lost income. The Whitehouse Station-based drugmaker has managed to fortify its business during the past two years with a series of product launches, including the Gardasil vaccine for cervical cancer and the diabetes medicine Januvia.[11]

As noted above, the Company recorded a pretax charge of $55 million in connection with the anticipated resolution of the investigation by the state Attorneys General under state consumer protection laws with respect to VIOXX. In the first quarter, the Company spent approximately $79 million in VIOXX legal defense costs, which resulted in an aggregate reserve, as of March 31, 2008, of approximately $5.348 billion related to the VIOXX litigation. As previously disclosed, since December 2007, the Company and its joint-venture partner, Schering-Plough, have received several letters addressed to both companies from the House Committee on Energy and Commerce, its Subcommittee on Oversight and Investigations, and the Ranking Minority Member of the Senate Finance Committee, collectively seeking a combination of witness interviews, documents and information on a variety of issues related to the ENHANCE clinical trial, the sales and promotion of VYTORIN, as well as sales of stock by corporate officers.[12] As of March 31, 2008, approximately 465 cases, which include approximately 940 plaintiff groups, had been filed and were pending against Merck in either federal or state court, including three cases that seek class action certification, as well as damages and medical monitoring. In these actions, plaintiffs allege, among other things, that they have suffered osteonecrosis of the jaw, generally subsequent to invasive dental procedures such as tooth extraction or dental implants, and/or delayed healing, in association with the use of FOSAMAX. In the first quarter of 2008, the Company spent approximately $7 million in connection with the FOSAMAX Litigation and added $40 million to its reserve solely for its future legal defense costs for the FOSAMAX Litigation. As of March 31, 2008, the Company had a reserve of approximately $60 million solely for its future legal defense costs for the FOSAMAX Litigation.[12]

Total overall costs associated with the Company's global restructuring program included in materials and production and restructuring costs were $85 million and $186 million for the first quarter of 2008 and 2007, respectively, primarily related to separations, accelerated depreciation and asset impairment costs. Other (income) expense for the quarter includes a $249 million gain on Merck's divestiture of its remaining worldwide rights to AGGRASTAT (tirofiban hydrochloride) to Iroko Pharmaceuticals and a gain of $2.2 billion from a distribution received from the AstraZeneca limited partnership in which Merck maintains an interest.[12] Restructuring costs, primarily representing employee separation costs associated with the Company's global restructuring program, net of gains on the sales of facilities and related assets, were $70 million for the first quarter of 2008.[12]

Worldwide sales of the Company's cervical cancer vaccine GARDASIL (Human Papillomavirus (HPV) Quadrivalent (types 6, 11, 16, 18) Recombinant Vaccine) as recorded by Merck, were $390 million for the first quarter of 2008, an increase of 7 percent from the first quarter of 2007.[12] Worldwide sales of Merck's other pediatric vaccines, which include VARIVAX (varicella virus vaccine live {Oka/Merck}), M-M-R II (measles, mumps and rubella virus vaccine live) and PROQUAD (measles, mumps, rubella and varicella {Oka/Merck} virus vaccine live), as recorded by Merck, were $226 million for the first quarter of 2008, a decrease of 8 percent compared with the same period a year earlier.[12] Worldwide sales of ZETIA, marketed as EZETROL outside the United States, were $582 million in the first quarter of 2008, an increase of 7 percent compared with the previous year's first quarter.[12] Worldwide sales of FOSAMAX and FOSAMAX PLUS D (alendronate sodium/cholecalciferol), which is marketed as FOSAVANCE throughout the European Union, were $470 million for the first quarter of 2008, representing a decrease of 37 percent compared with the first quarter of 2007. Since most formulations of these medicines have lost U.S. marketing exclusivity, the Company is experiencing a significant decline in sales in the United States of FOSAMAX and FOSAMAX PLUS D.[12]

Worldwide sales of Merck's antihypertensive medicines COZAAR (losartan potassium) and HYZAAR 3 (losartan potassium and hydrochlorothiazide) were $847 million for the first quarter of 2008, a 6 percent increase compared with the first quarter of 2007.[12]

Merck shares slipped 5 cents to $39.71 in late morning trading. They have traded in a 52-week range of $36.82 to $61.62. Merck, which is in the process of settling massive litigation over its withdrawn painkiller Vioxx with a $4.85 billion agreement, got hit with some new problems during the quarter. Its osteoporosis treatment Fosamax, which had been the leading drug in the category and one of Merck's top sellers, got new generic competition, cutting sales by 37 percent to $470 million.[2] Excluding the $1.4 billion ('890 million) gain from AstraZeneca PLC of Britain and other one-time items, Whitehouse Station, New Jersey-based Merck earned 89 cents per share in the latest quarter.[20]

The Kenilworth, N.J. -based company posted net income of $253 million, or 15 cents per share, down from $543 million, or 36 cents a share in 2007's first quarter.[8] First Quarter 2008 Results For the 2008 first quarter, Schering-Plough reported net income available to common shareholders of $253 million or 15 cents per common share on a GAAP basis.[6] Earnings per common share for the 2008 first quarter would have been 53 cents on net income of $862 million on a reconciled basis, which excludes purchase accounting adjustments and acquisition-related items for the OBS acquisition and other specified items.[6]

NEW YORK (Thomson Financial) - Schering-Plough Corp. Wednesday said first-quarter net income was $253 million, or 15 cents a share, while on a reconciled basis earnings were 53 cents a share.[21] Net income for the quarter was $291 million, or 15 cents a share, the Kenilworth, New Jersey-based company said today in a statement.[16] In the year-ago period, the company posted net income of $543 million, or 36 cents a share, on sales of $2.98 billion.[21]

For the quarter ended March 31, Merck reported net income of $3.3 billion, or $1.52 a share, compared with $1.7 billion, or 78 cents a share, a year earlier. The latest results included a 63-cent gain from Merck agreeing two months ago to not exercise its option to sell its interest in a number of AstraZeneca's minor products.[17] The maker of allergy and asthma pill Singulair reported net income of $3.3 billion, or $1.52 per share, for the January-March period, up from $1.7 billion, or 78 cents a share, a year ago.[3]

The maker of hepatitis and cholesterol medicines and Nasonex for allergies posted net income of $253 million, or 15 cents per share, down from $543 million, or 36 cents per share in the year-ago quarter.[5] Net income available to common stockholders for the quarter was $59 million or $0.11 per share, down from $185 million or $0.35 per share in the last year quarter.[9]

For the cervical cancer vaccine Gardasil, which was also launched in 2006, sales rose 7% to $390 million. Merck reaffirmed its full-year 2008 guidance of $3.28 to $3.38 earnings per share. Jami Rubin, analyst for Morgan Stanley, said in a published note that it was "highly encouraging" that Merck was able to maintain its full-year guidance while reducing its Vytorin sales estimate by $700 million. Rubin said this "proves to us the company's increased maneuverability and ability to cut costs."[10] "The 16-cent beat was spectacular," Morgan Stanley pharmaceuticals analyst Jami Rubin told company executives during a conference call. Chief Executive Officer Fred Hassan told The Associated Press in an interview that analysts likely expected the acquisition would reduce earnings per share until later this year, but it increased them by 4 cents in the quarter. He said results also were boosted by favorable exchange rates, rising sales in the combined company's animal health business — which leapfrogged to No. 1 worldwide — and strong growth in foreign markets for medicines including arthritis and inflammatory disease treatment Remicade and cholesterol drugs now under fire in this country.[8]

The $16 billion purchase aims to reduce Schering's dependence on Zetia and Vytorin, the company's best-selling products. U.S. sales slowed after a January study questioned their benefit and Chief Executive Officer Fred Hassan repeated today that the company was cutting 5,500 jobs as a result. "The Organon Biosciences acquisition dilutes Schering- Plough's dependence on the cholesterol joint-venture and allows it to leverage its cost structure,'' said Deutsche Bank analyst Barbara Ryan in a note to investors.[16] The data prompted doctors to recommend use of older, cheaper statins. Congress is investigating whether the companies withheld those study results over the last two years in order to boost sales, which reached $5.1 billion in 2007. Following the Vytorin study, the company said it will cut 10 percent of its 55,000-person staff, mostly in the U.S., to save $1 billion annually by 2012.[22]

Worldwide revenue reached $5.8 billion, an increase of 1 percent over the first quarter of last year. Those results were driven by sales of the Gardasil vaccine, as well as older drugs such as allergy medicine Singulair and Cozarr and Hyzaar, used to treat hypertension.[11] Vytorin and Zetia, the newly controversial cholesterol drugs, toted up $1.2 billion in sales, a 6 percent rise since the first quarter of 2007, but a big drop from fourth quarter figures. (And more declines are on the way, PBMs and managed care companies say.)[23] Combined sales of Vytorin and Zetia rose 6% to $1.2 billion for the first quarter. This represents a sharp slowdown from 2007, when sales were up 34%.[13]

In the first quarter, sales of Merck's hit cervical-cancer vaccine, Gardisil, rose 7% to $390 million, while allergy treatment Singulair increased 10% to $1.1 billion.[17]

Merck's revenues from the two drugs actually rose 6% to $1.2 billion in the quarter, but the company expects income from the partnership with Schering-Plough for the full year to drop by $700 million due to impact of the study.[14] The Whitehouse Station, N.J. -based company's profit rose 94.1% to $3.3 billion, or $1.52 a share, in the first quarter on a meager 1.7% increase in revenues over the first quarter of last year to $5.8 billion.[14]

Schering-Plough Corp. (SGP) reported a 48% decline in first-quarter profit on costs related to its acquisition of Organon BioSciences last year, a deal that also helped boost revenue 57%. In a quarter with many moving parts, the marketer of allergy drug Nasonex reported earnings excluding one-time costs that substantially exceeded Wall Street expectations, helped by favorable currency-exchange rates, cost cuts and higher income from its cholesterol joint venture.[19] Merck & Co.' s (MRK) first-quarter profit nearly doubled on a hefty payment from marketing partner AstraZeneca PLC (AZN), while Merck's revenue was roughly flat due to new generic competition for its osteoporosis drug Fosamax. Merck's earnings, excluding the large payment, exceeded Wall Street expectations, and the company reiterated its earnings forecast for 2008.[13]

Citi analyst George Grofik expects Schering-Plough's profit to miss Wall Street forecasts by 2 cents per share, but sees revenue reaching $4.6 billion.[22] Excluding charges related to Schering-Plough's $14.65 billion purchase in November of Organon BioSciences and other special items, Schering-Plough earned 53 cents per share. On that basis, analysts polled by Reuters Estimates had expected 37 cents per share, according to Reuters Estimates.[7]

On average, eight analysts polled by First Call/Thomson Financial expected the company to report earnings of $0.19 per share.[9] Analysts surveyed by Thomson Financial had expected earnings per share of 37 cents excluding one-time items, or 16 cents less than the company posted.[5] Excluding that and other one-time items, Whitehouse Station, N.J. -based Merck earned 89 cents per share in the latest quarter. That was 3 cents more than the forecast of analysts surveyed by Thomson Financial, who were expecting 86 cents per share, excluding one-time items.[2]

Lehman Brothers analyst Charles Butler, meanwhile, expects the Kenilworth, N.J., company to top Wall Street expectations by 2 cents per share on strong sales of Temodar, for brain cancer; Remicade, an arthritis treatment; and Nasonex, for allergies. The company will top its peers when it comes to gains from a weaker dollar, as its international sales make up about 67 percent of revenue.[22] Family-controlled Merck bought Serono SA for 10.3 billion euros last year, adding Rebif and reducing the company's reliance on liquid crystals for flat-panel televisions. The drug and chemical maker has used its 70 percent share of the liquid crystals market to prop up earnings as it expanded sales of Erbitux and close the gap on Roche Holding AG's Avastin.[24] There is no guarantee that reducing plaque thickness in the neck arteries will reduce the number of cardiovascular events. It is also unreasonable to assume that a decrease in cardiovascular events would occur without a reduction in plaque thickness. Another key point that I may have failed to make: There are many patients taking Zetia and Vytorin today that could be equally well served by other cholesterol medications. What troubles me is that Merck & Schering Plough not only delayed this study - while amassing $5 billion in sales of these drugs last year -but also may have participated in deceptive practices regarding other drug studies.[25] Assuming that Merck and Schering split profits equally (it is actually a little more complicated), that could mean a hit of $1.4 billion for sales of Zetia and Vytorin, compared to previous forecasts for the year. Merck had previously forecast it would recieve income from all its joint ventures of $3.0 billion to $3.3 billion in 2008.[26]

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.[4]

Ken Frazier, Merck director of global human health, said in a conference call with analysts Monday that Vytorin prescriptions dropped after that study was released, but sales seemed to have recently "stabilized." The company reduced its 2008 sales guidance for Vytorin and Zetia by $700 million. Merck has lost nearly one-third of its stock value since the study came out. This includes the 7% plunge that occurred since March 30, when scientists at the American College of Cardiology conference in Chicago suggested that Vytorin patients are better off taking the older "statin" class of cholesterol-controlling drugs. This class includes Merck's low-cost generic drug simvastatin.[10] The company also reduced the revenue it expects to receive from U.S. sales of certain AstraZeneca products - including heartburn drug Nexium - by $200 million, or about 12%. Merck, though, raised the sales guidance for its hypertension drugs Cozaar and Hyzaar, osteoporosis drug Fosamax and a compilation of smaller drugs, which the company labels "other reported products."[17] Other reported products comprise: ARCOXIA, CANCIDAS, COSOPT, CRIXIVAN, EMEND, INVANZ, ISENTRESS, JANUVIA, JANUMET, MAXALT, PRIMAXIN, PROPECIA, PROSCAR, STOCRIN, TIMOPTIC/TIMOPTIC XE, TRUSOPT, VASOTEC/VASERETIC, ZOCOR and ZOLINZA. Under an agreement with AstraZeneca (AZN), Merck receives revenue at predetermined percentages of the U.S. sales of certain products by AZN, most notably NEXIUM. In 2008, Merck anticipates that these revenues will be approximately $1.3 billion to $1.5 billion.[12]

Merck lost U.S. market exclusivity for the drug in February. Many big pharmaceutical companies are in a bind because they don't have enough new products in the near term to offset revenue lost to patent expirations. Merck, in turnaround mode since the 2004 withdrawal of its painkiller Vioxx on safety concerns and the 2006 loss of U.S. market exclusivity for its cholesterol drug Zocor, has undergone a restructuring that aims for $5 billion in annual savings by 2010. As of Dec. 31, Merck had cut about 7,200 positions since the inception of its restructuring program in 2006.[17]

The company's global cholesterol joint venture posted sales of $1.2 billion, while sales of the company's Remicade product rose 36% to $507 million.[21] Including an adjustment of an assumed 50% of a global cholesterol joint venture net sales, Schering-Plough's adjusted sales for the period would have been $5.3 billion.[27] Schering-Plough said total net sales for the cholesterol joint venture were $1.2 billion, flat with 2007.[19]

NOTE: Adjusted net sales, defined as net sales plus an assumed 50 percent of global cholesterol joint venture net sales, is a non-U.S. GAAP measure used by management in evaluating the performance of Schering-Plough's overall business. Schering-Plough believes that this performance measure contributes to a more complete understanding by investors of the overall results of the company. Schering-Plough provides this information to supplement the reader's understanding of the importance to the company of its share of results from the operations of the cholesterol joint venture.[6]

" Merck posted solid first quarter results despite the loss of patent protection for Fosamax, as well as a decline in expected sales from our Merck / Schering-Plough joint venture," Clark said in the earnings press release.[17]

Worldwide sales of ROTATEQ (rotavirus vaccine, live, oral, pentavalent), Merck's vaccine to help protect children against rotavirus gastroenteritis and one of the world's leading rotavirus vaccines, as recorded by Merck, were $190 million in the first quarter of 2008 compared with $85 million in the same quarter a year earlier.[12] JANUVIA, Merck's treatment for type 2 diabetes, recorded worldwide sales of $272 million in the first quarter of 2008 compared with $87 million in the same quarter in 2007.[12]

Total worldwide sales of Merck's other promoted medicines, which include JANUVIA (sitagliptin), JANUMET (sitagliptin phosphate and metformin hydrochloride) and ISENTRESS (raltegravir), were $1.8 billion for the first quarter, representing a 14 percent increase compared with the first quarter of 2007.[12] GAAP net sales for the 2008 first quarter totaled $4.7 billion, up 56 percent, as compared to the first quarter of 2007.[18] GAAP net sales for the 2008 first quarter totaled $4.7 billion, including $1.3 billion as a result of the OBS acquisition.[6]

Included in the first quarter of 2008 are $861 million in net sales related to Organon, the OBS human health business acquired in 2007.[6]

International sales of prescription CLARITIN were $128 million in the first quarter of 2008, a 14 percent increase compared to sales of $112 million in the first quarter of 2007 as a result of increased sales in Japan due to an early allergy season and favorable foreign exchange.[6] Sales of PEGINTRON for hepatitis C increased 4 percent to $225 million in the 2008 first quarter due to higher sales in Latin America, emerging markets across Europe and a favorable impact from foreign exchange, tempered by lower sales in Japan and the United States.[6] Sales of REMICADE increased 36 percent to $507 million in the first quarter of 2008 due to continued market growth and expanded use.[6] Global sales of CLARINEX, a nonsedating antihistamine, in the first quarter of 2008 were $213 million, up 4 percent as compared to sales of $204 million in the first quarter of 2007.[6] Consumer Health Care sales were $377 million in the 2008 first quarter, up 9 percent versus the 2007 period.[6]

Sales for NUVARING, a contraceptive product, in the 2008 first quarter were $96 million. Both products were obtained as part of the OBS acquisition.[6]

SGP has been slipping for the past year. Schering-Plough reported this morning a plunge of 48% for its first quarter profit which dropped to $291 million on charges tied to its acquisition of Organon BioSciences.[28] OBS Acquisition Contributes to First Quarter Performance; Company Taking Actions to Address New Challenges KENILWORTH, N.J., April 23 /PRNewswire-FirstCall/ -- Schering-Plough Corporation today reported financial results for the first quarter of 2008, reviewed progress on its ongoing integration of Organon BioSciences N.V. (OBS) (acquired in November 2007) and addressed recent events affecting the Merck/Schering-Plough cholesterol franchise.[6]

Merck also recorded a $300 million expense in the first quarter for a contribution to The Merck Company Foundation.[12] Sales for FOLLISTIM/PUREGON, a fertility treatment, for the first quarter of 2008 were $145 million.[6] During the quarter, U.S. sales of Vytorin fell 7 percent, to $496 million, and sales of Zetia amounted to $395 million, down 3 percent, over the same period last year.[11] Schering-Plough and partner Merck & Co. jointly sell Vytorin and Zetia, whose U.S. sales fell 5 percent in the quarter after the companies' study showed pricey Vytorin controls plaque buildup in arteries no better than generic Zocor; it did reduce bad cholesterol more.[8] After the Enhance data was released and Merck and Schering-Plough (NYSE: SGP ) got clobbered at the American College of Cardiology meeting, all eyes were really focused on how sales of cholesterol drugs Zetia and Vytorin did in the past quarter.[1] Merck's profits also were hurt by a sharp slowdown in sales growth for cholesterol drugs Vytorin and Zetia.[13]

The company's primary profit engine -- the joint venture with Merck & Co. to market cholesterol drugs Vytorin and.[29]

Analysts are looking for a profit of 37c on revenue of $4.51B. The consensus range is 29c to 45c for EPS, and revenue of $4.16B to $4.80B, according to First Call. The Vytorin controversy that has plagued Merck ( MRK ) and Schering-Plough might have a more pronounced effect on Schering, since the drug giant derives more than one-third of its pre-tax profits from Vytorin.[30] The effect of the Vytorin controversy on Merck's business may have taken Wall Street by surprise, although Merck provided some reassurance full-year earnings and profit would be cushioned by robust sales of other products as well as lower tax rates. "It was probably more than anticipated," Anthony Butler, a pharmaceutical industry analyst with Lehman Bros., said of the effect of Vytorin.[11] In a subsequent Securities and Exchange Commission filing, SGP said MRK can say what it wants to say and that it's not gonna play that game. Unlike most of its competitors, Schering doesn't give specific product sales guidance or overall earnings forecasts, so analysts are kind of left to their own devices. Hassan also tried to tout the company's long-term drug development pipeline, which he called "a tremendous asset." SGP has what officials referred to as a "paradigm changing" treatment for the muscle-relaxing side effects of anesthesia in late-stage tests; a combo pill of Schering's Claritin and Merck's asthma/allergy drug Singulair under Food and Drug Administration review; and a Hepatitis C drug that will have new data presented at a scientific conference in Milan this weekend. (You hear the term "paradigm changing" a lot in pharma and biotech.)[31]

Revenues, boosted by $1.3 billion from sales of Organon products, jumped 56 percent to $4.66 billion, slightly more than the $4.5 billion analysts anticipated.[8] Revenue for the quarter rose to $4.7 billion from $3 billion as sales of the rheumatoid arthritis treatment Remicade increased 36 percent to $507 million and the allergy treatment Nasonex increased 8 percent to $307 million.[16] The company's biggest division, pharmaceuticals, had revenues of $3.6 billion, led by Remicade, which saw sales jump 36 percent to $507 million.[8]

On the plus side, on the call the company also forecast that sales of the cervical cancer vaccine Gardisil could top two billion (not million) bucks this year. That's apparently not including potential revenue from the shots for older women. The FDA could approve it for that population later this year, but in the current unpredictable regulatory environment Merck says it ain't gonna count its chickens before they hatch. By the end of this year the company also plans to file for FDA approval of Gardasil for young men and boys.[32]

Merck's first-quarter sales rose 1% to $5.82 billion from $5.77 billion a year earlier. Sales of Fosamax declined 37% to $470 million, hurt by its loss of U.S. patent protection in February, which cleared the way for generic copycats.[13] The Street's at the bottom of that range. In recent years Merck has often raised guidance in its quarterly reports. Not this time. That's not just because of V-Z. Sales of the asthma-allergy drug Singulair also dropped sequentially by $100 million.[32]

Sales of arthritis drug Remicade, which Schering-Plough sells outside the United States, jumped 36 percent to $507 million.[7] Global sales of NASONEX, an inhaled nasal corticosteroid for allergies, rose 8 percent to $307 million versus the 2007 period, due to increased sales in international markets, partially offset by a decline in sales in the United States.[6]

Sales of the antibiotic AVELOX were up 24 percent to $142 million as a result of increased market share.[6]

The company lost $1.66 billion, or $11.69 a share, compared with net income of $213.3 million, or $2.02 a share, a year earlier.[33] The Kenilworth, N.J., company said net income for the three months ended March 31 fell to $291 million, or 15 cents a share, from $565 million, or 36 cents a share, a year earlier.[19] Shares of Cymer Inc. rose after the laser maker said first-quarter net income fell 36% to $12.9 million, or 41 cents a share, from $20.3 million, or 52 cents a share, a year earlier.[33] Including all charges, the drugmaker reported net income of $291 million, or 15 cents a share, down from $565 million, or 36 cents a share, a year earlier.[33]

In the year-earlier quarter, Schering-Plough recorded net income of $565 million, or 36 cents a share.[16]

Net income for the first quarter of 2008 was $3,302.6 million compared with $1,704.3 million in the first quarter of 2007.[12]

Glaxo's sales of immunizations helped net income, which surpassed analyst estimates by 20 million pounds ($39.6 million).[24] Leerink Swann analyst Seamus Fernandez said, "Sales, general and administrative expenses and research and development costs together were $190 million below our forecasts," and accounted for most of the earnings beat, along with strong international performance.[7] Street analysts expect earnings of $2.97 per share on revenues of $910.02 million.[9] The company posted adjusted earnings of 53 cents a share on revenue of $4.66 billion, topping analysts' predictions for earnings of 38 cents a share and revenue of $4.55 billion.[28] On average, analysts polled by Thomson Reuters had expected earnings of 37 cents a share on revenue of $4.52 billion.[34]

ANALYST TAKE: Analysts have taken mixed views on whether the company will meet Wall Street forecasts, but most agree that the inclusion of products from the $14.4 billion buyout of Organon Biosciences will boost revenue.[22] Last November, Schering-Plough bought biotech company Organon BioSciences, a big maker of women's and animal health products, for nearly $14.5 billion.[8]

The company said sales rose on the inclusion of $1.3 billion in sales from Organon BioSciences, which Schering acquired in November 2007.[21] Sales for the Kenilworth, N.J. -based pharmaceutical company rose 56% to $4.66 billion, above the $4.52 billion analyst estimate.[21]

Sales of Global Pharmaceuticals for the 2008 first quarter totaled $3.6 billion.[6] U.S. sales of VYTORIN and ZETIA, the cholesterol-lowering medicines under the Merck/Schering-Plough joint venture, were down slightly versus the 2007 first quarter while remaining strong in international markets. He also noted, "The tough cost-control measures we put in place in 2007 contributed to our profit performance in the recent quarter."[18] The increase was primarily due to sales of MIRALAX, which was launched in February 2007 as the first Rx-to-OTC switch in the laxative category in more than 30 years, as well as higher sales of OTC CLARITIN, which grew despite the aggressive launch of a competing OTC cetirizine allergy product. Schering-Plough does not record sales of its cholesterol joint venture and incurs substantial costs such as selling, general and administrative costs that are not reflected in "Equity income" and are borne by the overall cost structure of Schering-Plough.[6] Net sales (excluding the cholesterol joint venture net sales) is required to be presented under U.S. GAAP. The cholesterol joint venture's net sales are included as a component of income from operations in the calculation of Schering-Plough's "Equity income."[6] Net sales of the cholesterol joint venture do not include net sales of cholesterol products in non-joint venture territories.[6]

Schering-Plough's gross margin and ratios of selling, general and administrative (SG&A;) expenses and R&D; expenses as a percentage of sales do not reflect the benefit of the impact of the cholesterol joint venture's operating results.[6]

On Jan.25, 2008, the companies and the Merck/Schering-Plough Partnership (MSP Partnership) each received two subpoenas from the New York State Attorney General ' s Office seeking similar information and documents. Merck and Schering-Plough have also each received a letter from the Office of the Connecticut Attorney General dated Feb.1, 2008 requesting documents related to the marketing and sales of VYTORIN and ZETIA and the timing of disclosures of the results of ENHANCE. Merck and Schering-Plough also recently received subpoenas dated April 4, 2008 from the Office of the New Jersey Attorney General seeking documents related to the ENHANCE trial and the sales and marketing of VYTORIN. The Company is cooperating with these investigations and is working with Schering-Plough to respond to the inquiries. Since mid-January 2008, the Company has become aware of or been served with approximately 115 civil class action lawsuits alleging common law and state consumer fraud claims in connection with the MSP Partnership ' s sales and promotion of VYTORIN and ZETIA. Certain of those lawsuits allege personal injuries and/or seek medical monitoring.[12] The contribution reinforces the Company's strong commitment to enhancing the health and well-being of people around the world. Other (income) expense also includes a $55 million charge in connection with the anticipated resolution of a previously disclosed investigation by a group of Attorneys General from 31 states and the District of Columbia into whether the Company violated state consumer protection laws with respect to the sales and marketing of VIOXX (rofecoxib). The resolution of these matters still is subject to execution of definitive agreements.[12]

The company has indicated that prescriptions aren't likely to recover substantially in 2008. Merck lowered its forecast of equity income from affiliates by $700 million to account for the reduced outlook for the cholesterol drugs.[13] The Company expects a generally even distribution of non-GAAP EPS across the remaining quarters in 2008. Both the non-GAAP and GAAP EPS ranges include a $700 million reduction in equity income guidance, attributable to the lower-than-anticipated contribution from the Merck/Schering-Plough joint venture, as well as updates to other guidance elements to reflect current business trends.[12] The forecast for income to Merck from the Merck/Schering-Plough joint venture, which sells Zetia and Vytorin, comes down $700 million.[26] The $700 million decrease in equity income guidance is solely attributable to the lower anticipated contribution from the Merck/Schering-Plough joint venture.[26]

The program targets annual savings from of $1.5 billion, which represents approximately 10 percent of the company's full-year 2007 estimated cost base. This target includes the previously announced OBS integration synergy goal of $500 million. Under the plan, Schering-Plough expects to cut its workforce by 10%, representing the reduction of about 5,500 jobs. [27] The company has targeted annual savings from PTP of $1.5 billion, which represents approximately 10 percent of the combined company's (Schering-Plough/OBS) full-year 2007 estimated cost base. This target includes the previously announced OBS integration synergy goal of $500 million and anticipates a 10 percent reduction in the global work force, or about 5,500 jobs. "We will be disciplined and rigorous in how we achieve these savings," said Hassan, "and we will execute this program with care and prudence.[6]

Research and development expense (which excludes joint ventures) is anticipated to be approximately $4.7 billion to $4.9 billion. As part of the Company ' s restructuring of its operations, additional costs related to site closings, position eliminations and related costs will be incurred in 2008. The aggregate 2008 pretax expense related to these activities is estimated to be in the range of $100 million to $300 million.[12]

Materials and production costs were $1.2 billion for the quarter, a decrease of 19 percent from the first quarter of 2007.[12] Marketing and administrative expenses were $1.9 billion for the first quarter of 2008, an increase of 3 percent from the first quarter of 2007.[12]

Total revenue for the quarter grew 2.8% to $1.06 billion from $1.03 billion in the first quarter of 2008.[9]

Revenue for the quarter increased 4% to $680.055 million from $655.034 million a year ago.Same store service sales increased 3.3% for the quarter.[9] Sales rose 7% to $390 million from a year earlier, and were also up from the disappointing $339 million posted for the fourth quarter.[13]

Net sales for the period increased 5.5% to $130.9 million from $124.1 million in the comparable period last year.[9]

The nearly $400 million in first-quarter Gardasil sales may prove Merck was right when it said a dip in the vaccine's revenue in Q4 was due to back-to-school seasonality.[32] Worldwide sales of ISENTRESS, Merck's first-in-class HIV integrase inhibitor for use in combination with other antiretroviral agents for the treatment of HIV-1 infection in treatment-experienced adult patients, were $47 million in first-quarter 2008.[12]

First-quarter sales jumped to $4.66 billion from $2.98 billion a year earlier and ahead of the Thomson estimate of $4.52 billion. The purchase of Organon landed products such as the Follistim fertility treatment and Nuvaring contraceptive, plus animal-health products.[19] Global sales of prescription drugs totaled $3.6 billion, almost one fourth of which came from newly acquired Organon products.[7] Sales jumped 56 percent to $4.66 billion, above the Reuters Estimates forecast of $4.51 billion, bolstered by products acquired in the Organon deal.[7]

"We have been challenged before, we've succeeded, we can do it again.'' Schering said on April 2 it would cut 10 percent of its workforce, about 5,500 workers, and shut plants to save $1.5 billion as it braces for falling Vytorin and Zetia sales in the U.S. Hassan reiterated that during his call today.[16] Sales in the pharmaceuticals division amounted to $3.6 billion, led by arthritis and inflammatory disease treatment Remicade, which saw sales jump 36 percent to $507 million.[5] GSK is suffering on a sharp decline in Avandia sales, reporting a 9 percent decline in profits to $3.9 billion.[23]

April 23 (Bloomberg) -- GlaxoSmithKline Plc, Europe's largest drugmaker, U.S. competitor Schering-Plough Corp. and Germany's Merck KGaA reported first-quarter profit that beat analyst estimates on sales of vaccines, cholesterol pills and cancer treatments.[24] April 23 (Bloomberg) -- Schering-Plough Corp., the maker of the Vytorin and Zetia cholesterol pills, said first-quarter profit fell 48 percent, less than analysts expected, on costs for acquiring Organon Biosciences NV.[16] The product has been on the market since 1999 and its patents aren't due to begin expiring until 2012. Glaxo reiterated its forecast for the year. Schering-Plough Corp. said first-quarter profit fell 48 percent, reflecting costs for its acquisition of Akzo's Organon Biosciences NV.[24]

TRENTON, N.J. (AP) — Schering-Plough Corp. on Wednesday reported a 48 percent plunge in first-quarter profit, primarily from costs related to its biggest acquisition ever, but the drugmaker trounced Wall Street expectations.[8] TRENTON, N.J. (AP) — Schering-Plough Corp. on Wednesday reported a 48 percent plunge in first-quarter net income, due to increased spending on research, higher overhead and costs related to an acquisition — its biggest ever — in the prior quarter.[5]

Schering-Plough rose $1.02, or 6 percent, to $18.16 at 12:45 p.m. in New York Stock Exchange composite trading. Glaxo shares climbed 18 pence, or 1.6 percent, to 1,120 pence in London and have lost 12 percent of their value this year. Merck's stock gained 4.86 euros, or 5.8 percent, to 89.44 euros in Frankfurt and have risen 3.9 percent this year. [24] Schering-Plough rose 96 cents to $18.10 at 9:30 a.m. in New York Stock Exchange composite trading. That's the most since April 3, the day after the company announced job cuts.[16]

Schering-Plough shares rose 83 cents, or 4.8%, to $17.97 in recent trading Wednesday.[29] Despite the sales shortfall, in pre-market trading, Merck shares rose 1.4% to $40.33.[17]

Merck is reaffirming its 2008 guidance for $3.28-$3.38 earnings per share.[32] Looking ahead to the fourth quarter, the company expects earnings per share in a range of $0.55 to $0.62.[9] Looking ahead to the second quarter, Host Hotels & Resorts projects FFO per share in range of $0.54 - $0.56 and earnings per share between $0.35 and $0.37.[9]

For fiscal 2008, the company now expects FFO per share in range of $1.88 - $1.98 and earnings per share between $1.00 and $1.10.[9]

Analysts estimate the company to report $0.57 per share and $1.93 per share for the second quarter and 2008, respectively.[9] Quarterly earnings rose to 89 cents per share, without restructuring charges and a tax gain from an AstraZeneca ( AZN ) partnership, the company said. This is up from 84 cents in the year-ago quarter.[10] Results for the period included purchase accounting adjustments and acquisition-related items. Excluding these items, the company's earnings per share would have been 53 cents, up from 42 cents a year-ago.[27]

The latest quarter included purchase-accounting adjustments and acquisition- related and other items. Excluding these, earnings were 53 cents a share, well above the mean estimate of analysts surveyed by Thomson Reuters of 37 cents a share. Schering-Plough doesn't provide specific earnings forecasts and has cited this policy in previous instances when results have diverged from Street expectations.[19]

Earnings per common share for the 2008 first quarter would have been 53 cents on a reconciled basis, which excludes purchase accounting adjustments and acquisition-related items for the OBS acquisition and other specified items.[18]

NEW YORK (Associated Press) - Drug developer Schering-Plough Corp. reports earnings for the first quarter on Wednesday.[22]

I usually cover pharma earnings from my desk at CNBC HQ in Englewood Cliffs, NJ. But because Merck made a rare offer to interview its Chairman and CEO Dick Clark exclusively this morning I'm out at Merck's idyllic HQ campus in central NJ. The Dow component's earnings report gave us the first look at the impact of the Vytorin-Zetia study on the sales of those cholesterol drugs.[32] Wall Street expects sales of the drug _ a combination of Merck's Zocor and Schering-Plough's newer drug Zetia _ to decline following disappointing data from a long-awaited study.[22]

Merck reported strong sales of respiratory drug Singulair, cervical cancer vaccine Gardasil and hypertension medications. Sales of its osteoporosis drug Fosamax dropped 37% on the advent of generic competition. "We are encouraged that they reaffirmed guidance despite additional challenges in the quarter. Our estimates confirm that they can achieve that," said BMO Capital Markets analyst Robert Hazlett. "It's good that they have attempted to quantify the impact of Vytorin on their financials for the year, but in general it's in line with what we were thinking."[14] The market just shrugged. The company only mustered a 1% year-over-year growth in sales, but that's to be expected given the 37% decrease in sales of blockbuster osteoporosis drug Fosamax after it lost patent protection earlier this year. Unlike Pfizer (NYSE: PFE ), which can't seem to cover its generic-competition shortfall, Merck is at least keeping pace.[1]

The $1.4 billion gain from AstraZeneca PLC, $2.22 billion before taxes, was a scheduled payment from a decades-long deal under which the London-based company promotes chronic heartburn drug Nexium and several other products in which Merck owns an interest.[2] Merck's stock has lost, by one analyst's estimate, about $40 billion in market cap in recent months. That's largely because of the V-Z controversy. Speaking of that, I'll have another exclusive interview with the head of the other JV partner, SGP CEO Fred Hassan after his company reports earnings Wednesday.[32] Exxon Mobil was the most profitable Fortune 500 company last year by far, raking in $40.6 billion in earnings.[10]

Spending on consumer-directed drug advertising fell 3% last year to $5.4 billion, according to Nielsen Media Research. It was the first drop in the industry's history.[35]

Revenues totaled $5.82 billion, up 1 percent from $5.77 billion in the first three months of 2007 but below analysts' expectations of $6.11 billion.[2] Revenue increased 57 percent to $4.7 billion with the addition of the Organon products.[24]

For the period, the company benefited from strong gains from Organon, which came with sales of $1.3 billion.[4] The company said overall sales were driven by the asthma treatment Singulair, which increased 10% to $1.1 billion.[10]

Sales rose 0.9% to $5.82 billion, including a 4 percentage-point boost from favorable foreign-exchange rates, but fell short of the Thomson Financial estimate of $6.11 billion.[17] Singulair sales rose 10% to $1.1 billion, a slower growth rate than the 19% posted for 2007.[13]

For full-year 2008, Merck sees Gardasil sales of $1.9 billion to $2.1 billion, versus $1.5 billion for 2007.[13]

JANUMET, a single tablet that addresses all three key defects of type 2 diabetes launched in the United States in April 2007, recorded sales of $58 million during the quarter.[12] Sales of VARIVAX, a vaccine for the prevention of chickenpox, were $149 million for the quarter as the Advisory Committee on Immunization Practices' second-dose recommendation continued to be implemented.[12]

Included in marketing and administrative expenses in the first quarter of 2008 are $40 million in reserves solely for future legal defense costs for litigation related to FOSAMAX (alendronate sodium).[12] Included in R&D; spending in the first quarter of 2007 was $96 million related to upfront payments made for licensing transactions.[6] Research and development spending for the 2008 first quarter increased to $880 million compared to $707 million in the first quarter of 2007.[6]

SG&A; expenses were $1.7 billion in the first quarter of 2008 versus $1.2 billion in the prior-year period.[6]

Sales of the embattled diabetes med--which has been fighting safety concerns since a now-infamous meta-analysis linked it with cardiac troubles last May--dropped by 56 percent in the first quarter.[23] OVERVIEW: The company's cholesterol drug Vytorin faced a series of damaging events over the quarter that could have long-lasting effects on sales.[22] Schering-Plough said U.S. sales for the drugs were down slightly, while sales outside the U.S. remained strong. Neither company records sales from the venture, but rather its performance is reflected on each company's income statement under "equity income."[19] Sales of Avandia, once Glaxo's second-best-selling drug, have declined in the U.S. since a May report in the New England Journal of Medicine linked the pill to increased heart-attack risks. Bestsellers such as Coreg for high blood pressure and antidepressant Wellbutrin faced pressure from generic versions in the quarter, Chief Executive Officer Jean-Pierre Garnier's final three-month period before he retires next month.[24]

Sales tripled to $272 million for the diabetes drug Januvia, which was launched in 2006.[10] Sales of TEMODAR, a treatment for certain types of brain tumors, grew 20 percent to $236 million due to increased sales across all geographic regions.[6]

Schering-Plough's earnings make Glaxo look positively glowing: The Zetia-and-Vytorin maker saw profits plunge by 48 percent to $291 million.[23] Merck, the Darmstadt-based maker of the Erbitux cancer drug, had profit of 239.1 million euros ($382.4 million), 31.4 million euros better than estimates.[24]

The company also said today that it has increased spending on research by 24 percent to $880 million as it expands the number of drugs in testing.[16] The U.K. company's Avandia sales declined 56 percent to 191 million pounds after the product was linked to increased risk of heart attacks.[24] Animal health products sales totaled $723 million, while sales of consumer products were $377 million.[8]

Sales of Remicade, a treatment for rheumatoid arthritis and Crohn's disease, rose 36% to $507 million.[19]

For Schering-Plough, total equity income rose to $517 million from $487 million. That exceeded Goldman Sachs' estimate of $456 million.[19] Net income was $291 million, or 15 cents, compared with $565 million, or 36 cents, a year earlier.[24] Net income was 239.1 million euros, or 1.10 euros a share, compared with a loss of 8.3 million euros, or 4 cents, a year earlier.[24] Glaxo's net income fell to 1.31 billion pounds, or 24.2 pence a share, from 1.51 billion pounds, or 26.7 pence, a year earlier.[24]

Shares of Ambac Financial Group Inc. were down 19% after the bond insurer barfed out a terrible earnings report, writing down $1.73 billion in collateralized-debt-obligation losses and an additional $1.04 billion in loss provisions. [33] Excluding certain items, Merck sees earnings of $3.28 to $3.38 a share, compared with the Thomson Financial estimate of $3.28 a share.[13] Excluding items, Merck reported per-share earnings of 89 cents, surpassing the average analyst estimate of 86 cents, according to Thomson Financial.[17]

The question Wall Street analysts and investors are trying to figure out is by how much. As part of its earnings release, Merck essentially gave its estimate, indicating that most or all the growth the medicines had in 2007 will vanish in 2008. Schering-Plough responded in a "Frequently Asked Questions" section of its Web site, which was also filed with the U.S. Securities and Exchange Commission. Basically, Schering reiterated its policy of not giving financial guidance and seemed to say that Merck's guidance should not be seen as definitive.[36]

"My clients are very concerned when legislators begin talking about proposals to restrict that speech." Rep. John Dingell, D-Mich., and Republican Sen. Charles Grassley, R-Iowa, are probing whether Merck and Schering-Plough oversold the benefits of their drug Vytorin, the cholesterol pill that has battered the stocks and reputations of both companies. Merck and Schering pulled their advertisements for the drug in January, immediately after releasing data that showed their drug was no more effective at stopping some types of plaque buildup than a low-cost generic. Lawmakers have seized on the fact that the companies had those results as early as 2006 yet continued to run advertisements. Earlier this year Pfizer announced it would discontinue its signature ads for Lipitor, the best-selling drug in the world, after Dingell raised questions about spokesman Dr. Robert Jarvik's credentials. The Energy and Commerce Committee chairman said that Jarvik, the artificial heart inventor, was unqualified to give medical device since he is not a licensed physician. Though he did earn a medical degree, Jarvik has acknowledged that he never completed the certification tests needed to practice medicine.[35] Simvastatin is available as a generic and is marketed under the brand Zocor by Merck. Schering-Plough executives continued to defend Vytorin's ability to lower bad cholesterol Wednesday, noting that this approach has been shown to reduce the risk of heart problems. The companies also have been criticized for their handling of the study, most notably by delaying the release of the results for nearly two years after it was completed in 2006. The companies have said they encountered data-quality problems and needed to repeatedly verify the data.[19] New Jersey's attorney general has issued subpoenas to Merck and Schering-Plough, probing the Enhance study, which found that Vytorin did no better at treating artery-clogging than Zocor did alone. The study results, remember, were delayed for some two years while the companies and their researchers wrangled with the data.[15]

As you may recall, Merck & Schering Plough recently released a long-awaited study that demonstrated that their very popular cholesterol-lowering drug Zetia was not as effective as the company had hoped. This was a study completed in April 2006, but not released in full until a recent article in an issue of the New England Journal of Medicine. In my last column, I wrote that not only were these medicines not as useful as we once thought, but also that there were even suggestions that they may be harmful. This was based on data that measured the thickness of plaque in the neck arteries of 720 people over the course of two years.[25]

FDA will continue taking comments on the issue through today and is expected to issue a final regulation in coming months. While drugmakers may be on the cusp of winning more freedom to promote medicines to doctors, their consumer-directed marketing campaigns are getting increasingly negative attention from politicians. Congressional lawmakers on both sides of the aisle are investigating whether advertisements for blockbuster drugs from Pfizer Inc., Merck & Co. Inc. and Schering Plough Corp. have misled consumers. '' Company executives gathered in Washington on April 18 for an annual meeting on pharmaceutical marketing, which appears to be leveling off after years of expansion.[35]

While the company reaches the midway point of a multiyear restructuring plan and tries to resolve a huge piece of the litigation around the pain-relief drug Vioxx, it finds itself trying to salvage the reputation -- and revenue -- of Vytorin, a cholesterol-lowering medicine Merck sells in a partnership with Schering-Plough.[11] Schering-Plough, cutting 5,500 jobs, bought Akzo Nobel NV's drug unit to counter falling revenue from the Vytorin and Zetia cholesterol medicines.[24]

In early April, Schering-Plough launched a new Productivity Transformation Program (PTP) to address the increasing pressures on the pharmaceutical industry, especially new pressures in the United States, and the confusion in the U.S. cholesterol management market that is affecting ZETIA and VYTORIN. "We are taking decisive actions to reduce and avoid costs and to accelerate our productivity initiatives," said Hassan.[6] Schering-Plough has taken other steps to weather the cholesterol drug challenge. Earlier this month, the company said it would cut costs including a 10% reduction in its work force, or about 5,500 jobs.[19] Schering-Plough Corp. gained 6.6% in premarket action after the company exceeded analyst expectations, when excluding costs related to the acquisition of Organon BioSciences.[33] "The first full quarter since acquiring Organon BioSciences shows that our long-standing strategy to diversify our company is working," said Fred Hassan, chairman and CEO. "The OBS acquisition is already contributing to our results and adding long-term value.[18]

Schering-Plough's gross margin on a GAAP basis was unfavorably affected by purchase accounting adjustments and as a result was 54.1 percent for the 2008 first quarter as compared to 68.5 percent in the 2007 period.[6] The gross margin was 78.7 percent for the first quarter of 2008 and 73.6 percent for the first quarter of 2007, reflecting 0.3 and 2.0 percentage point unfavorable impacts, respectively, relating to the restructuring costs noted above.[12] The gross margin percentage excluding purchase accounting adjustments was 68.9 percent in the first quarter of 2008.[6]

During the first quarter of 2008, the U.S. Food and Drug Administration (FDA) accepted, and designated for priority review, a supplemental Biologics License Application for the potential use of GARDASIL in women aged 27 through 45.[12] In the Monday conference call with analysts, Merck Chief Executive Richard Clark defended Vytorin, noting that it is still effective in reducing LDL, a harmful type of cholesterol. This is the use for which it was originally approved by the Food and Drug Administration.[10] "Vytorin and Zetia remain valuable treatment options to lowering LDL cholesterol," said Clark. "We will advocate for continued use of these important medicines." Clark said he "takes the criticisms very seriously" in regards to Vytorin, but he decried the "lack of scientific discussion" from critics at the ACC conference. Robert Hazlett, analyst for BMO Capital Markets, said that "negative adjustments" to wholesale purchases of Vytorin are likely in the second quarter, but he doesn't expect any more "dramatic downdrafts" in the use of Vytorin and Zetia. "We're not expecting any material additional calamities for these drugs," said Hazlett.[10]

A downturn in U.S. prescriptions could be prolonged. "The unwarranted confusion in the U.S. about cholesterol management and about our products Vytorin and Zetia that started in January clearly had a big impact on this important franchise," Chief Executive Fred Hassan told analysts on a conference call.[19]

As previously disclosed, the equity income guidance already included the impact of the reduction of the AZLP priority return and the buyout of the Astra USA products which occurred in March 2008. Given these guidance elements, Merck anticipates full-year 2008 non-GAAP EPS of $3.28 to $3.38, excluding certain items, and 2008 GAAP EPS in the range of $3.84 to $4.00. [26] As of March 31, 2008, $3.7 billion remains under the current buyback authorizations approved by Merck ' s Board of Directors. Given these guidance elements, Merck anticipates full-year 2008 non-GAAP EPS of $3.28 to $3.38, excluding certain items, and 2008 GAAP EPS in the range of $3.84 to $4.00.[12]

Twelve Wall Street analysts had a consensus revenue estimate of $4.52 billion.[27] The company's quarterly revenue jumped by a respectable 57% to $4.66 billion.[4]

Revenue outlook for the quarter is in a range of $710 million to $720 million, up 5% to 7%.[9] The quarter also included $292.2 million in other investment and portfolio losses.[33]

Duval has been granted options to purchase 300,000 common shares of the company at an exercise price of $0.16 per share, pursuant to the terms of the company's Stock Option Plan. [9] Earlier, Host Hotels & Resorts said it anticipates FFO per share of $1.88 - $1.98, and earnings per share of $1.05 - $1.14.[9] "We are accelerating plans to optimize our cost base, transform our business model and maximize performance across all of our products." Management believes that providing this information enhances investors' understanding of the Company's performance. This information should be considered in addition to, but not in lieu of, earnings per share prepared in accordance with GAAP.[12]

Analysts' forecasts (which typically exclude one time items) were for 37 cents per share in the quarter.[4] Schering-Plough beat the Street by a surprising 16 cents per share and the beaten-down shares are rallying.[31]

Shares rose 6 percent, or $1.02 cents, to $18.16 in early trading Wednesday.[5] Shares of Merck were off by 0.2%, or 7 cents, to $39.68 in afternoon trading.[14]

Shares were up 6 percent, or $1.02, to $18.16 in late-morning trading Wednesday.[8]

Shares of Schering-Plough (nyse: SGP - news - people ) closed Tuesday at $17.14.[21] On the conference call, an executive said its market share among cholesterol-lowering drugs fell 3 percent in March from December levels (before the preliminary data questioning their efficacy were released) -- and that it continues to fall, in the wake of the detailed and damning results and interpretation presented at the cardiologists' convention at the end of last month. Hassan and his team vigorously defended the franchise, but they also shot the messenger: They blamed the news media for causing what they repeatedly called "an unwarranted uproar, unwarranted confusion and unwarranted concerns" that have been "undermining patient care and the war on heart disease."[31]

Results of a patient study released in January raised questions about the effectiveness of the drugs, which Merck co- markets in a joint venture with Schering-Plough Corp. (SGP).[13] Equity income from affiliates includes the results of the Merck and Schering-Plough collaboration and Sanofi-Pasteur MSD combined with the results of Merck ''' s other joint venture relationships.[26] "The Merck/Schering-Plough cholesterol joint venture developed potential scenarios about the 2008 equity income. Merck chose an estimate that is within the ranges established in those scenarios."[36]

The initial blow to Vytorin, the cornerstone of a joint venture over cholesterol medicines, came in January following the release of data from a small study named Enhance.[11]

The data failed to show Vytorin -- a combination of the cholesterol drugs Zocor and Zetia -- reduced arterial plaque build-up, although it proved effective at lowering cholesterol.[11] It was clear from the feedback on my April 15 column that problems with the cholesterol drugs Zetia and Vytorin are of great interest to many of you.[25]

The "Enhance" study showed that Vytorin, which is a combination of the drugs Zetia and simvastatin, was no better than simvastatin alone at slowing thickening of the arteries, despite producing a greater reduction in bad cholesterol. There continues to be no solid evidence that Vytorin's cholesterol benefit translates into reduced risk of heart attacks and related events versus simvastatin alone; a large study designed to measure this won't be finished until next decade.[19]

The attention given the Enhance study has been an "unwarranted uproar,'' Chief Executive Officer Fred Hassan said today in a conference call with analysts. The company will continue to aggressively promote use of the drugs because of their proven ability to lower levels of cholesterol, which can build up on artery walls creating a blockage. "We are committed to these treatments and we will continue to advocate their appropriate use,'' Hassan said.[16]

Combined sales for the drugs in the U.S. fell 5 percent, while increasing 46 percent overseas. A price increase of 5.5 percent for both drugs helped offset declining prescriptions in the U.S., said Bear Stearns & Co. analyst John Boris in an April 18 note to clients.[16] Sales rose to 1.86 billion euros, Merck said in an e- mailed statement today. That beat the 207.7 million-euro median estimate of seven analysts in a Bloomberg survey.[24] NEW YORK (CNNMoney.com) -- Merck said Monday its first-quarter earnings jumped due to income from a partnership, but the drugmaker's sales showed just a slight gain.[10] Investors are invited to a live audio webcast of Merck's first-quarter sales and earnings conference call today at 9 a.m. EDT by visiting the Newsroom section of Merck's Web site, www.merck.com/newsroom/webcast/.[12]

Read deep into Merck's first-quarter earnings report and you'll find some Vytorin secrets spilled.[15]

The drugmaker's earnings double from AstraZeneca-related tax gain, but sales only edge up 1%; CEO defends Vytorin.[10] Frazier said sales of Zetia rose 37 percent, while Vytorin sales jumped 45 percent, over last year.[11] The overall sales increase of 56 percent includes the impact of the OBS net sales and a favorable impact of 7 percent from foreign exchange on stand-alone Schering-Plough sales.[6] We have geographic and business diversity, with nearly 70 percent of our GAAP net sales coming from outside the United States.[6]

Sales for the quarter benefited from the inclusion of OBS net sales as well as a favorable impact from foreign exchange.[18] Foreign exchange favorably affected global sales performance by 4 percent for the quarter.[12]

Worldwide sales will be driven by the Company ' s major products, including the impact of new studies and indications.[12] "I don't think that because a 'New England Journal of Medicine' article is handed out by a pharmaceutical company that changes the science of the article." Democratic lawmakers, including Rep. Henry Waxman of California, have said the rules would give companies too much leeway in publicizing unapproved uses of their products. They want the FDA to review the indications discussed in articles before companies distribute them to doctors, as was required under now-expired regulations.[35] FiercePharma is the pharma industry's daily monitor, with a special focus on pharmaceutical company news and the market development of FDA approved products.[23]

Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements in this press release should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in the risk factors and cautionary statements in Item 1A of Merck's Form 10-K for the year ended Dec. 31, 2007 and in any risk factors or cautionary statements contained in the Company's periodic reports on Form 10-Q or current reports on Form 8-K, which the Company incorporates by reference. [12] The following table shows the financial results for Merck & Co., Inc. and subsidiaries for the quarter ended March 31, 2008 compared with the corresponding period of the prior year.[12] Merck had a decent quarter and will most likely have an OK year. The market's failure to be impressed with the company making its own guidance is likely because its initial forecasts tend to be conservative. The market isn't impressed with companies that just make their back-up plan.[1]

About Merck's drug Viox: The company may have used ghost writers to publish research, which was then rubber-stamped by prominent doctors, the Wall Street Journal reported last week. It is clear that giving the companies the benefit of the doubt and waiting for more studies is not an option.[25] Merck & Co., Inc. is a global research-driven pharmaceutical company dedicated to putting patients first. Established in 1891, Merck discovers, develops, manufactures and markets vaccines and medicines to address unmet medical needs. The Company devotes extensive efforts to increase access to medicines through far-reaching programs that not only donate Merck medicines but help deliver them to the people who need them.[12]

A pretax charge of approximately $100 million to $300 million associated with the Company's global restructuring program.[12] The first-quarter 2008 and first-quarter 2007 costs include $15 million and $118 million, respectively, for costs associated with the global restructuring program.[12]

Merck is benefiting from Erbitux, which it developed with Imclone Systems Inc. "These companies have fundamental problems,'' said Les Funtleyder, an analyst for Miller Tabak & Co. in New York, in a telephone interview today. "Balancing cutting costs versus trying to get the pipeline going versus replacing revenue lost to patent expirations, it's the same narrative.[24] Data storage giant EMC Corp. said first-quarter net income fell 14% on acquisition charges, but revenue rose 17%, exceeding analyst expectations.[33] Revenue from Vytorin and Zetia increased 6 percent, below what some analysts expected.[16] The bolstered portfolio proved to be an advantage, as sales of the osteoporosis drug Fosamax slipped and Vytorin revenue melted away.[11] The Whitehouse Station, N.J., drug maker's quarterly revenue fell short of expectations, hurt by generic competition and a slowdown in sales growth for asthma and allergy medication Singulair, which was recently linked to reports of suicidal behavior and mood changes.[13]

Trying to put a good face on it, outgoing CEO Jean-Pierre Garnier ( photo ) said that, without the impact of Avandia and generics, the pharma business would have grown by 7 percent--a meaningless statistic, of course, because Avandia and generics are reality. He should have simply pointed out that GSK had some bright spots, too: Asthma drug sales rose, and two new vaccines got the FDA nod.[23] Schering-Plough posted sales increases for other drugs including the Temodar brain-tumor treatment, Pegintron hepatitic C drug and Clarinex allergy treatment.[19] Schering-Plough said an increase in sales outside the U.S. was partially offset by a decline in the U.S. due to a " slow start" to the allergy season.[19]

Schering-Plough paid about $16 billion in November for Organon, a unit of Amsterdam-based Akzo. [24] Equity income from affiliates is expected to be approximately $2.3 billion to $2.6 billion for 2008.[26] In connection with the Settlement Agreement, in 2007, the Company recorded a pretax charge of $4.85 billion, which represents the fixed amount to be paid by the Company to settle qualifying claims.[12] The company was expected to earn 1.29 billion pounds, the median estimate of 12 analysts surveyed by Bloomberg.[24]

Profit excluding some items was 53 cents a share, beating analysts' estimates by 15 cents and boosting shares the most in almost three weeks in New York trading.[16] Kenilworth, New Jersey-based Schering-Plough's profit excluding some items beat estimates by 15 cents.[24]

Excluding these items, the company's profit came in above the amount predicted by analysts.[27]

The mean estimate of analysts polled by Thomson Financial was for 37 cents a share. [21] The company earned 53 cents a share, ahead of the consensus estimate of 37 cents a share, according to Thomson Reuters.[33] Pfizer is an Income Investor recommendation. To see how dividend-paying stocks can offer both secure income and the opportunity for growth, take a free look at this newsletter with a 30-day free trial. Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article.[1]

The effective tax rate to be applied to the AstraZeneca gain and the Company ' s restructuring costs is at a higher level than the underlying effective tax rate guidance. Merck plans to continue its stock buyback program in 2008.[12] Product gross margin (PGM) percentage is estimated to be approximately 77.5 percent to 78.5 percent for the full-year 2008. This guidance excludes the portion of the restructuring costs that will be included in product costs and will affect reported PGM in 2008.[12]

In late March, the U.S. Food and Drug Administration said it was investigating a possible association between Singulair and suicidal behavior and mood changes. Merck had previously made changes in the product's label to reflect the reports of such events.[13] Merck, which isn't related to Merck & Co. of the U.S., benefited as doctors increased the use of Erbitux and the multiple sclerosis drug, Rebif.[24]

Merck and Schering-Plough have defended the effectiveness of the drugs at lowering levels of bad cholesterol.[13] Schering-Plough and Merck have stepped up marketing to doctors and health insurers to defend the effectiveness of the drugs.[19] Merck and Schering-Plough hoped a panel discussion at the annual meeting of the American College of Cardiology last month would help assuage concerns about the drug.[11]

Merck and Schering-Plough have received subpoenas from attorneys general in New Jersey, Connecticut, and New York for information about how the study, called Enhance, was handled.[16]

Schering-Plough does not assume the obligation to update any forward-looking statement. Through its own biopharmaceutical research and collaborations with partners, Schering-Plough creates therapies that help save and improve lives around the world. The company applies its research-and-development platform to human prescription and consumer products as well as to animal health products. Schering-Plough's vision is to "Earn Trust, Every Day" with the doctors, patients, customers and other stakeholders served by its colleagues around the world.[6] Hassan observed that Schering-Plough has undergone a remarkable transformation over the past five years. Adhering to a five-phase Action Agenda, it has become a broad-based health care company with growing strengths across its businesses, research capabilities and geographic markets.[6] The acquisition is expected to be accretive to the company's EPS by about 10c in the first full year.[30]

WHITEHOUSE STATION, N.J.--( BUSINESS WIRE )--Merck & Co., Inc. today announced financial results for the first quarter of 2008.[12] SG&A; in the first quarter of 2008 increased primarily due to the impact of the inclusion of SG&A; expenses from OBS and foreign exchange.[6]

Cognet-X first surveyed managed care executives during the week of Jan. 14, 2008, when preliminary ENHANCE data were released. As in January, two-thirds of those surveyed in April saw few immediate formulary changes as a result of ENHANCE. Current controls such as tier positioning, step therapy and generics-first mandates effectively ensure appropriate use of Vytorin and Zetia, respondents said. [37] The drug makers expected that over time the thickness would decrease if patients took Zetia or Vytorin. Unfortunately, this did not occur.[25]

The drugs' combined share of the U.S. cholesterol-drug market declined three percentage points between December and March, according to Carrie Cox, Schering- Plough's president of global pharmaceuticals. More recent prescription data suggest a further decline, she said.[19] Excluding accounting adjustments and acquisition-related items, earnings for the period were 53 cents a share.[34] Along with the earnings news, the company commented on the cost-reduction plan it announced in early April.[27]

Sales actually grew by a whopping 57 percent--but that was due to the inclusion of Organon's products. [23] "The results were very good,'' Ulrich Huwald, an analyst at M.M. Warburg in Hamburg said in an interview. "This gives Merck a good start to a year that may be difficult because of the weak dollar.''[24] Merck had a mixed beginning to 2008, but it still expects to meet its forecast for the full year despite reduced prospects for the best-seller Vytorin.[14]

SOURCES

1. Will Merck Make It?
2. The Associated Press: Merck profit almost doubles in 1Q on gain; sales edge up
3. The Associated Press: Merck profit almost doubles in 1Q on gain; sales edge up
4. Schering-Plough (SGP) sees quarterly profit falling 48% on merger costs - BloggingStocks
5. The Associated Press: Schering-Plough 1Q profit drops 48 percent on buyout costs
6. Schering-Plough Reports Financial Results for First Quarter of 2008
7. Schering shares jump on profit | Markets | Hot Stocks | Reuters
8. The Associated Press: Schering-Plough 1Q profit drops 48% after major acquisition
9. RTTNews - Quick facts Articles, Positive EPS Surprises, News Analysis, Earnings, Audio News.
10. Merck CEO defends Vytorin, but reduces its guidance - Apr. 21, 2008
11. Merck's quarterly profit jumps, beating forecasts - New Jersey Local & Small Business News ' Economics & Finance News Articles - NJ.com
12. Merck Reports First-Quarter 2008 Financial Results
13. 3rd UPDATE: Merck 1Q Net Nearly Doubles On AstraZeneca Gain
14. Merck Holds The Line - Forbes.com
15. Vytorin news buried in Merck report - FiercePharma
16. Bloomberg.com: U.S.
17. 2nd UPDATE: Merck 1Q Net Nearly Doubles On AstraZeneca Gain
18. SunHerald.com : Schering-Plough Reports Financial Results for First Quarter of 2008
19. 2nd UPDATE: Schering-Plough 1Q Net Down 48% On Charges
20. Merck almost doubles 1st-quarter profit on one-time gain, but sales edge up
21. Schering-Plough 1Q EPS 15 cents; sales including acquisition up 56% to $4.66B - Forbes.com
22. Earnings Preview: Views mixed on Schering-Plough 1Q
23. GSK, Schering-Plough profits drop - FiercePharma
24. Bloomberg.com: Europe
25. House Call with Dr. Andy: Cholesterol drugs' effectiveness in question | news-press.com | The News-Press
26. The Science Business by Matthew Herper
27. Schering-Plough Earnings Fall On Acquisition Charges [SGP] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
28. Schering-Plough (SGP) NewsBite - Schering-Plough EPS Tops Estimates
29. Free Preview - WSJ.com
30. Earnings Preview: Schering-Plough Pharmaceuticals - Seeking Alpha
31. Schering Plows Through Vytorin Firestorm - Pharmas Market with Mike Huckman - MSNBC.com
32. Merck: Its Ups And Downs - Pharmas Market with Mike Huckman - MSNBC.com
33. MarketBeat Blog - WSJ.com : Premarket: Amblecch
34. Schering-Plough 1Q Net Down 48% To $291 Million
35. firstamendmentcenter.org: news
36. The Science Business by Matthew Herper
37. Vytorin Coverage with Leading Health Plans Revisited - See Uptake of Generic Simvastatin and Crestor Without Need for Widespread Formulary Changes

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