Early Tuesday morning, Schering-Plough (NYSE:SGP) treated investors to a sight they hadn't seen in about two and a half years -- growth in sales. Sales grew 12% for the fourth quarter, to $2.2 billion. If you're willing to set aside generally accepted accounting principles (GAAP) and include Schering's interest in a cholesterol drug joint venture, the numbers are even better -- $2.4 billion and 17% sales growth.

As two and a half years of sales declines would suggest, Schering has had its problems. Not only had drug sales declined while inventory grew, but also the company found itself in hot water with the Food and Drug Administration. Nevertheless, CEO Fred Hassan seems to have this company back on the right track. Prescription growth was up 15% for the quarter, and Schering reported sales declines for only one of its leading drugs.

The key to Schering's recovery likely will be Vytorin. A unique cholesterol therapy, Vytorin has the potential to be a blockbuster on the order of $2 billion to $3 billion in sales. Investors need to remember, though, that this drug is part of a partnership with Merck (NYSE:MRK) and that all profits will be split 50/50. Investors also need to remember that Vytorin is not a new drug, but rather a combination of Merck's Zocor and Schering's Zetia.

Investors wishing to take a flier on pharmaceutical turnarounds need to remember that they take time. What's more, Schering's stock is already up about 30% from its lows at the end of 2003. There is also risk here -- given Schering's rather shallow drug pipeline (at least in comparison to its peers), it really needs Vytorin to succeed for the turnaround to work.

While a skeptic could argue that Schering is already valued on par with its peers (at least in terms of price-to-sales and price-to-book), I believe this overlooks a couple of points in Schering's favor. Unlike downtrodden peers like Wyeth (NYSE:WYE), Merck, or even Pfizer (NYSE:PFE), Schering doesn't have the legal uncertainty of ongoing or potential class-action patient lawsuits to worry about. What's more, Schering is quite a bit smaller than these giants, suggesting that there is a real opportunity to boost results if drugs like Vytorin are successful.

Schering is undoubtedly a risky turnaround play, and investors looking for a more stable play would do well to look at Pfizer shares instead. Nevertheless, those who believe that Hassan can keep the turnaround going and that Vytorin can be a big winner could see outsized gains from this downtrodden drug company.

Fool contributor Stephen Simpson is a chartered financial analyst. He has no ownership interest in any stocks mentioned.