Many of the larger pharmaceutical companies are either experiencing sagging sales from the onset of generic competition or are facing a bleak future with no compounds in their pipelines to account for upcoming patent expirations on their top drugs. Schering-Plough (NYSE:SGP) is not one of them. After reporting its financial results yesterday, the drugmaker showed that in 2006 it has finally righted itself after a turnaround plan that took several years.

For the year, Schering's sales, adjusted to account for half of the revenue from the Merck (NYSE:MRK) cholesterol-drug collaboration, gained a solid 17% to $12.5 billion, and earnings came in at $1.1 billion, or $0.71 a share. Operating margins jumped 9 percentage points to 14% for 2006, even with a 17% increase in research-and-development spending. Since Schering is still in the fairly early stages of a multiyear turnaround, I would expect operating margins to continue climbing, as its sales ramp up more quickly than operating expenses.

Speaking of R&D, although Schering doesn't have the largest pipeline in the world, it can claim a few notable compounds, including its phase 2 protease inhibitor for hepatitis C, and there's also the possibility for label-expanding indications on Remicade and the Zetia/Vytorin franchise, which together represented nearly a fourth ($3.2 billion) of Schering's total revenue and experienced sales growth of almost 50% last year.

Without solid financials, any pharmaceutical firm's R&D is going to suffer, and without a strong pipeline, its financials are bound to hit a wall at some point. Considering that Schering-Plough is strong in both areas and is trading at 23 times analyst estimates of $1.07 for next year's earnings, investors would be smart to take a look at this pharmaceutical turnaround stock before it starts to get noticed again.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.