It can be tough to identify the point at which a company has stanched its bleeding, put improvements into place, and become a real turnaround candidate.
In the case of pharmaceutical company Schering-Plough
Part and parcel of the turnaround is getting growth back on track. Sales in the quarter rose 15% as prescription pharmaceutical sales climbed 18%. Growth was fueled by a variety of products, including above-average growth for Remicade, PEG-Intron, and Temodar. While net income growth was hampered by a large R&D payment made to acquire rights to an antibody drug candidate, year-over-year performance was still notably improved.
It certainly looks like Schering-Plough has the business moving in the right direction again, and Vytorin seems to be a big part of that improvement. Sales from the company's cholesterol-fighting joint venture with Motley Fool Income Investor pick Merck
Of course, there are still risks with this turnaround story. Something could happen to Vytorin -- unexpected competition, a previously unknown side effect, etc. -- and that would obviously be a painful blow. Additionally, although the company continues to make progress in its regulatory clean-up efforts with the FDA, it's not in the clear just yet. Finally, there are the normal risks to all pharmaceutical companies -- drug litigation, trial failures, etc.
I would think that Schering-Plough should be set to produce several years of good profit growth in a time when many of its peers and rivals will be struggling with single-digit growth or worse. That said, the stock seems to reflect a lot of those expectations already. So while there's probably still some running room for the company, I'm not sure there's a lot of unappreciated value here right now.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).