High Cholesterol Key to Drugmaker Profits
Wed Jul 21, 2004 12:14 PM ET
By Bill Berkrot
NEW YORK (Reuters) - Pfizer Inc. on Wednesday posted solid quarterly earnings on surging sales of cholesterol treatment Lipitor, while results of rivals Merck & Co. and Schering-Plough Corp. were hurt by increased competition for key drugs.
Merck and Schering-Plough are awaiting imminent approval for a new cholesterol treatment that combines their two drugs and should spark a reversal of fortune.
Wyeth reported strong second-quarter sales growth from its key drugs for depression and ulcers, despite the ongoing litigation from its recalled diet drugs that has forced it to set aside more than $16 billion in liability reserves.
Overseas, Roche's profit nearly doubled on strong cancer drug sales.
Shares of all five companies rose on Wednesday, with Wyeth enjoying the biggest boost -- a 3 percent gain.
"There's a sigh of relief today on Wall Street that there were no major disappointments among the drugmakers that reported earnings," said David Moskowitz, an analyst for Friedman, Billings, Ramsey.
Demonstrating that cholesterol is king in the current pharmaceutical climate, Pfizer said sales of Lipitor -- the world's top-selling drug -- rose 17 percent to $2.36 billion for the quarter.
Merck's cholesterol drug, Zocor, had sales of $1.4 billion but grew at a slower rate than Lipitor.
Merck and Schering-Plough expect approval -- possibly as soon as this week -- for a new cholesterol tablet that combines Zocor with newer Zetia in a single pill.
Wall Street believes the new drug, Vytorin, will eventually reach annual sales of up to $8 billion, providing much-needed good news for Schering-Plough and insurance for Merck as it faces the loss of Zocor patent protection in 2006.
"The fact that Merck was able to simply tread water was good enough for most investors," Moskowitz said.
He said stockholders were being patient with Merck and Schering-Plough because of excitement over Vytorin.
Antidepressants are also proving to be a solid growth driver.
Sales of Wyeth's depression drug Effexor soared 31 percent to $831.8 million, while Pfizer's Zoloft surged 25 percent to $789 million for the quarter.
"Wyeth beat forecasts with blowout results," Moskowitz said, referring to sales of Effexor and ulcer drug Protonix, which was up 25 percent.
Pfizer, the world's largest drugmaker, recorded a net profit of $2.86 billion, or 38 cents per share, compared with a loss of $3.59 billion, or 48 cents a share, a year ago.
Excluding special items, including $747 million in charges related to its 2003 Pharmacia acquisition, Pfizer earned 47 cents per share, in line with analyst expectation.
Merck posted a 5 percent decline in quarterly earnings to $1.77 billion, or 79 cents per share -- also in line with Wall Street expectations -- amid stiff competition for several of its top drugs. Results exclude contributions from pharmacy benefits manager Medco, which Merck spun off last August.
Wyeth's net profit fell 4.3 percent to $827.3 million, or 62 cents a share, reflecting a big one-time gain a year ago. Revenue rose 13 percent.
Schering-Plough, still struggling to rebound from the loss of patent protection on allergy drug Claritin and desperate for a boost from Vytorin, posted a quarterly loss of $65 million, or 4 cents per share, missing Wall Street expectations of a loss of 1 cent.
Net sales fell 7 percent to $2.1 billion as Roche Holding AG's newer hepatitis C drugs cut deeply into sales of Schering-Plough's medicines.
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