The company says 2002 profits will be 35% to 40% lower than it previously thought, thanks to an even sharper-than-expected decline in sales of Claritin. The world's top antihistamine was relegated to over-the-counter status in December, but management -- thinking doctors would continue writing prescriptions for the drug during the "market transition period" -- shipped enough of it to meet anticipated demand. Prescriptions fell sharply, however, and now the company is unsure how much product might be returned for refunds. Thus, the fourth-quarter results will reflect a decision to completely write off all the Claritin that remains with wholesalers.
That will drop earnings from the anticipated $1.58 per share for 2002 to the $1.40 to $1.42 range. Meanwhile, 2003 earnings projections of $1.00 to $1.15 per share remain intact.
When Schering first warned about lagging Claritin sales, it caused quite an uproar. The announcement was preceded by a 15% drop in the stock price, prompting an SEC investigation into whether the company had tipped analysts and large investors before the official warning. CEO Richard Kogan announced his resignation six weeks later.
After all the turmoil, Schering's share price, while off only 3% in afternoon trading, sits uncomfortably near a five-year low.