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Business

Schering-Plough Sees 'Turnaround' after Rough Patch

by Rick Mullin
October 31, 2005 | A version of this story appeared in Volume 83, Issue 44

Pharmaceuticals

Proclaiming the beginning of a corporate “turnaround phase,” Schering-Plough CEO Fred Hassan reported last week that third-quarter earnings for the recently struggling drugmaker were triple those of 2004.

Net earnings hit $43 million, compared with $14 million in the third quarter of 2004. Sales of $2.3 billion were 15% higher than they were a year ago. Results were boosted by strong sales of key products, including cholesterol-lowering drugs marketed in partnership with Merck.

Previously head of Pharmacia, Hassan turned down the vice chairman post at Pfizer after Pfizer acquired the rival firm. He took the helm at Schering-Plough in 2003 amid falling sales due to loss of patent protection for Claritin, the $3 billion-a-year antihistamine. Schering-Plough was also forced to pay $500 million to FDA to resolve manufacturing compliance issues and faced a Securities & Exchange Commission probe and civil action related to inappropriate information disclosure.

Hassan’s immediate actions included eliminating more than 1,000 jobs and implementing other cost-cutting measures. Hassan cited supply-chain upgrades as key to improved third-quarter performance.

“Schering-Plough has halted a downward spiral of performance,” the CEO said. “We are now driving growth and steadily building strength.” The company will focus on developing its pipeline and product portfolio, he said, indicating that it will pursue licensing and comarketing partnerships.

This year, Schering-Plough has inked development and commercialization agreements with Centocor for golimumab, a fully human monoclonal antibody being developed for rheumatoid arthritis, and with Millennium Pharmaceuticals for Integrilin, an acute coronary syndrome treatment.

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