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Profits continue to plummet at Schering-Plough

Published on 29/10/03 at 04:19pm

Schering-Plough has issued its third earnings warning this year as it continues to suffer under an onslaught from generic competition.

The company's Chief Executive Fred Hassan has warned that profits will fall more than 70% as generics claim sales from blockbuster allergy treatment Clarinex, while a similar generic threat hangs over hepatitis C combination treatment Peg-Intron/Rebetol.

Forecast earnings per share have been drastically cut back and investors see no immediate signs of recovery, despite rapid reforms of the company by Mr Hassan.

The former Pharmacia boss has finalised a new organisational structure in every part of the company, including the global pharmaceutical business, OTC division, finance and R&D.

Hassan says addressing competitive challenges and stemming the rapid decline in market shares of its top products is one of the company's top priorities, but warned it would take time.

"Our objective for Schering-Plough is to build a solid foundation for growth it not about making quick fixes", he said.

The company is pinning its hopes on new cholesterol absorption drug Zetia (Ezetrol in Europe) which has earned 1.5 million prescriptions in the US since its launch last November.

Analysts say the drug and a single combination pill with Merck's statin Zocor, due later this year could produce peak annual sales of $5 billion, but will struggle to sustain the company alone.

Former Pharmacia communications chief Ken Banta has been drafted in to turn around Schering-Plough's tarnished image, which has suffered following record FDA fines for lapses in manufacturing standards.

Carrie Cox, another former colleague at Pharmacia is to lead the new global pharmaceutical business, effectively replacing both Richard Zahn, head of prescription drugs and Hans-Jorg Kummer, head of overseas operations.

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