This summary is based on the second quarter fiscal 2007 earnings call conducted by Schering-Plough Corp. (SGP) on July 23, 2007.
Key Investors Issues
- Net income rose by 118% to $517 million, or 34 cents per share, versus $237 million, or 16 cents per share, in the year-ago quarter.
- Net sales increased 13% to $3.2 billion from $2.8 billion a year ago.
- Organon BioSciences acquisition currently awaits clearance and approval.
- Gross margin for full year 2007 is expected to be better than it was in 2006.
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Second Quarter 2007 Highlights
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Net income grew from $237 million in 2006 to $517 million including charges of $106 million related to a $60 million upfront licensing payment.
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Earnings per Share rose from 16 cents in June 2006 to 34 cents. EPS inclusive of special items of 7 cents, 4 cents related to an upfront payment for Asentar.
Sales rose 13% to $3.2 billion, reflecting continued sales growth across businesses.
- Adjusted sales increased 15% to $3.8 billion as Vytorin and Zetia continued to grow.
- Zetia was launched in Japan and recorded sales of $29 million.
- Gross margin improved to 69.3% versus 64.4% in the 2006 period due to product mix and cost savings from streamlining actions.
SG&A expense grew 11% to $1.4 billion from $1.2 billion in June 2006 due to additional promotional investments.
R&D expenses amounted to $696 million up from $539 million a year ago, reflective of increased investments in ongoing clinical trials.
Portfolio Sales Performance
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Global Pharmaceuticals increased 13% from $2.23 billion in 2006 to $2.52 billion.
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Consumer Health Care rose13% from $349 million a year ago to $394 million.
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Animal Health strenghtened 10% from $239 million in June 2006 to $264 million.
Global cholesterol franchise sales increased 34% to nearly $1.3 billion.
- Sales from the cholesterol franchise outside the U.S increased 83% to $330 million.
- Remicade, the only biologic agent approved for pediatric Crohn''s disease in the EU, increased sales by 28%.
Management reported on favorable rulings which dismissed claims relating to branded pharmaceutical products in a class action lawsuit.
- Global Nasonex sales increased 22% and maintained market leadership among nasal steroids with a value share of more than 37%.
- Pegintron combination therapy was approved in the EU for the treatment of hepatitis C in patients coinfected with the HIV virus.
- Combined global sales of Temodar and Caelyx increased 25% to $281 million.
Geographic expansion is driving strong growth in markets such as Turkey and China.
Management will continue to focus on the long-term strategy through investing in R&D, in global supply chain, in global quality systems, in sales force, and other key areas.
Continued focus on Research & Development will include:
- Launch of Resflor, a combination anti-infective/anti-inflammatory in animal health.
- Novel thrombin receptor antagonist compound, or TRA, for preventing deadly arterial blood clots is on track to begin Phase III later this year.
- Further Phase II data to be released for Boceprevir, the protease inhibitor compound for HCV and Vicroviroc, a compound for HIV AIDS.
- Conclusion of end licensing deal for Asentar from Novacea. Asentar is a compound for prostate cancer now in Phase III clinical trials.
Approved products:
- Remicade in Europe for pediatric Crohn''s disease.
- EU approval for the use of Pegintron combination therapy for patients co-infected with HCV and HIV.
Consumer health care portfolio has been expanded to include:
