Speed the Plough

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If you believe the stories, people who have near-death experiences come away from it all as very different people. That seems to be true for corporations as well; the revived Schering-Plough (NYSE: SGP) now seems like a very different company.

While I wouldn't say that this company is out of the woods yet, it continues to move toward the edge of the forest. Internal sales rose 6% for the fourth quarter; adding in the company's share in its cholesterol joint venture with Merck (NYSE: MRK) boosts that to 13% growth. Though business in the over-the-counter unit and animal health wasn't so good (down 9% and 4%, respectively), pharmaceutical sales were up 10% (excluding the joint venture).

As with many big drug companies, Schering-Plough's high-performing products didn't see much movement. Remicade is still the largest single contributor and continues to grow (up 19% this quarter), while other drugs like PEG-Intron, Rebetol, Temodar, and Nasonex all also made significant contributions.

Sales were up 89% in the cholesterol joint venture, while Schering's stake in equity income climbed 173%. Investors may recall that the primary asset in this joint venture is the combination cholesterol drug Vytorin. (I'm sure you've all seen ads for that one at least a dozen times per night on TV.)

When looking at Schering-Plough's pipeline, we need to step back a bit for perspective. Though the pipeline is relatively modest in size and depth, this is also among the smallest companies grouped into the pharmaceutical industry. As a result, it doesn't take quite so much bang for it to make a buck. Nevertheless, the company does have some high-potential products in development for hepatitis C, AIDS, and rheumatoid arthritis, though competitors like ValeantPharmaceuticals (NYSE: VRX) and Pfizer (NYSE: PFE) are working on similar projects in hep-C and AIDS, respectively.

These days, it seems that every pharmaceutical company is facing above-average risks from some combination of product safety lawsuits, generic competition, and weak pipelines. But Schering-Plough is arguably one of the few whose risk level is actually decreasing. Combined with better-than-average growth, that could continue to make this a stock worth owning for some time.

For more Foolish takes on the drug trade:

• Reddy, Set, Go!
• Pfizer: Less Bad Is Good Enough
• Vytorin Lifts Schering-Plough

Fool contributor Stephen Simpson owns shares of Valeant Pharmaceuticals but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). Merck is a Motley Fool Income Investor pick. Pfizer is a Motley Fool Inside Value pick. The Fool has a disclosure policy.