Schering-Plough Corp.'s (SGP) third-quarter profit fell 16% on increased charges while the company saw a 5% drop in sales of the cholesterol drugs it sells jointly with merger partner Merck & Co. (MRK)
The companies' joint venture has been under pressure since an early 2008 study raised questions about the safety and effectiveness of Vytorin and Zetia. Meanwhile, the $49 billion Schering-Merck deal announced in March remains on track to close in the current quarter. Merck is buying Schering to diversify its pipeline, a move sparked by continuing generic competition, pricing pressure and difficulty in bringing new drugs to market.
Schering-Plough's earnings dropped to $515 million, or 29 cents a share, from $677 million, or 39 cents a share, a year earlier. Excluding acquisition-related charges and other impacts, earnings rose to 40 cents from 39 cents.
Net sales fell 1.7% to $4.5 billion, reflecting a 6-percentage-point hit from currency changes.
Analysts surveyed by Thomson Reuters were expecting earnings, excluding items, of 40 cents a share on revenue of $4.47 billion.
Gross margin fell to 61.8% from 62% on the charges, and fell 1 percentage point excluding them on the currency chanages.
Three-fifths of the cholesterol venture's sales drop was due to the foreign-exchange fluctuations. Sales slid 10% in the U.S.
Among Schering-Plough's non-cholesterol treatments, sales of arthritis drug Remicade rose 8%, or 18% excluding currency changes, while allergy treatment Nasonex saw a 3% increase, also held back by foreign exchange rates. Cancer drug Temodar grew 2%.
Schering-Plough shares closed Wednesday at $29.01 and didn't trade premarket. The stock is up 70% this year.
Merck is expected to report its results later Thursday.
-By Mike Barris and Kevin Kingsbury, Dow Jones Newswires; 212-416-2330; email@example.com