Schering-Plough Expected to Show Turnaround in Earnings

Strategic Insights -

Schering-Plough, the US pharmaceutical group, is anticipated to show a significant improvement in first-quarter earnings, with expectations forecasting a 12 percent revenue growth to $2.2 billion. The company's older products, which have been hindered by competition, mismanagement, and corporate distractions, are expected to show renewed vigor. This would mark a turnaround for the company, which has been struggling since its products suffered from heavy competition and low morale. Schering-Plough's growth relies heavily on two newer drugs, Vytorin and Zetia, co-marketed with Merck, which are expected to drive earnings higher.

Key Takeaways:

  • Schering-Plough is expected to report a strong revenue growth of 12 percent to $2.2 billion in the first quarter.
  • The company's older products are expected to show renewed vigor, driven by improved marketing and sales efforts.
  • Schering-Plough's growth is heavily reliant on Vytorin and Zetia, which are co-marketed with Merck.
  • The company has been working to resolve manufacturing regulatory problems and legal cases against it.
  • Resolving the manufacturing issues is crucial to avoid significant fines or product bans.
  • Schering-Plough received approval for its asthma drug Asmanex and formed an alliance with Bayer to market its older primary care drugs and Levitra.
  • Expectations are also high for the company's international business, driven by stronger foreign currencies.

Statistics:

  • 12 percent revenue growth expected for Schering-Plough.
  • $2.2 billion revenue forecast for the first quarter.
  • 1 cent earnings per share expected for Schering-Plough, against a loss of 1 cent last time.
  • Schering-Plough paid a $500 million fine to the US Food and Drug Administration for manufacturing violations.
  • The company is expected to resolve its manufacturing regulatory problems by the end of the year.

Sources:

  • Financial Times Limited 2005.