Turnarounds take time, but if the first quarter is an accurate picture of what's happening at Schering-Plough
Schering-Plough also reported a net profit for the quarter of $105 million or $0.07 a share, reversing the year-ago loss. While the company made some minor improvements in margins, equity income from its cholesterol joint venture with Motley Fool Income Investor recommendation Merck
Luckily, that partnership with Merck is paying off in a big way, as Vytorin is proving to be a very popular drug regimen. A combination of Zetia and Zocor, Vytorin is currently a unique option for treating cholesterol -- and sales of the joint venture more than doubled in the March quarter to $505 million, from $188 million a year ago.
Other companies, such as Motley Fool Inside Value pick Pfizer
Schering-Plough's other drugs also performed well in the March quarter. Sales of Remicade, which Schering-Plough sells outside the United States, grew 33% to $220 million, and Temodar sales climbed 52% to $131 million. Other drugs like Nasonex, PEG-Intron, and Claritin Rx all showed double-digit revenue growth. Rebetol was the only significant drug to show year-over-year declines.
Though Schering-Plough stock is nowhere near the heights seen back in late 2000, the shares have come up nicely off the bottom and are near a 52-week high. The company still has room for improvement with respect to its margins, and there is a clear opportunity to grow revenue with its current product portfolio.
That said, Schering-Plough investors must realize that the company has a rather sparse late-stage pipeline relative to other large pharmaceutical peers. Though that is not a major problem today, it is something for long-term investors to keep an eye on over time. Remember, no matter how well management has performed in getting this business on the path to a turnaround, pharmaceutical companies ultimately win and lose on the strength of their pipeline and/or their ability to supplement that pipeline with licensed and partnered products.
For more on the pharmaceutical space, please read these other Foolish takes:
- Wyeth Looking Healthier
- Pfizer Fosters Fertile Future
- Is Lilly About to Bloom?
- Does Forest Have the Blues?
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).