Schering-Plough Again Cuts Forecast
Schering-Plough Corp. on Wednesday cut its 2003 profit forecast by 25%, its second earnings warning in five months and the latest disappointment in a stream of bad news.
Plunging sales of the company’s Claritin allergy pill and new competition for its hepatitis C treatments prompted the company to lower its forecast to between 75 cents and 85 cents a share. That represents a decline of 37% to 44% from the $1.34 a share it earned last year.
First-quarter earnings are expected at 10 cents a share, well below the average estimate of 25 cents a share among analysts polled by Thomson First Call. Schering-Plough also withdrew its earlier forecasts for 2004 and 2005.
The latest warning comes as the Kenilworth, N.J.-based company faces federal probes of quality-control lapses at its plants and possibly inappropriate disclosures to select investors by Chief Executive Richard Kogan.
“We knew 2003 was going to be a challenge, but it appears it’s going to be more of a challenge than we expected,” said Robert Hazlett, an analyst at SunTrust Robinson Humphrey.
Shares of Schering-Plough fell 53 cents to $16.60 on the New York Stock Exchange, nearly a six-year low. They have declined almost 65% since February 2001, when the company disclosed manufacturing problems at plants in New Jersey and Puerto Rico.
Schering-Plough warned in October that its 2003 profit would be only $1 to $1.15 a share, far lower than the $1.42 a share that Wall Street had been expecting.
That bombshell came after an unexplained three-day, 20% decline in shares of the company’s stock during which Kogan met privately with select investors, sparking a probe by U.S. regulators.
Schering-Plough’s woes have included the plant problems that have caused U.S. regulators to hold up approvals of new drugs, including asthma treatment Asmanex that some analysts think could become a blockbuster.
Its best-selling products are the interferon Peg-Intron and antiviral pill ribavirin, used together to treat hepatitis C, which boasted combined fourth-quarter sales of more than $800 million.
But Swiss drug maker Roche Holding in December launched a rival interferon called Pegasys and its own cheaper form of ribavirin in the United States, ending Schering-Plough’s monopoly in treating the often-deadly liver disease.
Meanwhile, Schering-Plough is facing disappointing demand in Japan for its hepatitis drugs. And it is bracing for the possibility that generic forms of the ribavirin component of its dual treatment will hit U.S. drugstores later this year.
The company is also reeling from December’s expiration of its U.S. patent on Claritin, which once had global annual sales of more than $3 billion.
