No Pharma Love for Schering

Unlike its cholesterol-drug partner Merck (NYSE: MRK), whose stock price jumped more than 8% yesterday, solid earnings growth for Schering-Plough (NYSE: SGP) did nothing to help its stock price. Investors have apparently come to expect stellar performances after 11 straight quarters of adjusted double-digit sales growth.

For the second quarter, Schering's profits more than doubled year over year on 13% growth in sales of its products. The sales growth doesn't include the 30% increase in sales of cholesterol-fighting drugs Vytorin and Zetia, which Schering accounts for under the equity method since it co-markets them with Merck.

The stellar increase in Vytorin and Zetia sales is definitely a good sign, given the falling sales of other major anti-cholesterol drugs, including Pfizer's (NYSE: PFE) top-selling Lipitor, after generic forms of Merck's Zocor flooded the market last year. Sales of Zetia should increase further in the coming quarters, since Schering launched sales in Japan last month in a separate marketing agreement with partner Bayer (NYSE: BAY). The company estimates that Japan will become Zetia's second-largest market, following only the United States.

Schering also experienced strong demand for the anti-inflammatory arthritis-fighting drug Remicade, for which Johnson & Johnson (NYSE: JNJ) is responsible for sales in the U.S. and a few other territories. Although sales growth has been slowing, Schering may see the pace pick back up since Remicade last month received marketing approval for pediatric Chron's disease in the European Union.

Meanwhile, in the earnings release, Schering said it's on track to complete the purchase of the Organon drug unit of Akzo Nobel (Nasdaq: AKZOY) by the end of the year. The acquisition will add five phase 3 drugs in the fields of gynecology, fertility, anesthesia, and neuroscience to Schering's pipeline, and the greater variety should help reduce the company's dependence on Zetia and Vytorin for earnings growth.

If Schering can increase the number of products it sells and continue to have double-digit sales growth, investors can expect to see steady stock-price increases. And sometimes, slow and steady wins the race.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool's disclosure policy is rock-solid.