Headcount: 51,000
Pharma Revenues*: $16,534 (+29%)
Total Revenues*: $20,783 (+36%)
Net Income: $1,903 (n/a)
R&D Budget: $3,529 (+21%)

Account for 53% of total pharma sales, down from 62% in 2007.

* Pharma revenues include $2.3 billion in Zetia and Vytorin sales. The latter derive from a joint venture with Merck and are not counted as drug revenues by SP. I have reported half of Vytorin/Zetia sales as SP revenues to give a clearer idea of SP’s pharma performance. Glad that’s over with.

PROFILE

When Fred Hassan was brought in as chairman and chief executive officer of Schering-Plough in 2003 following his sell-off of Pharmacia to Pfizer, conventional wisdom was that SP’s days were numbered. Some were thrown off the trail when SP bought Organon for $16 billion in late 2007; perhaps SP was going to make a go of it on its own, they — okay, “I” — thought. At the time, Mr. Hassan said it was “unlikely” that SP would merge with another company. After all, he’d shepherded it out of legal and regulatory woes, managed to get some new drug revenues while building up the pipeline via this acquisition.

I guess a leopard can’t change its spots. With Vytorin/Zetia revenues under pressure, Mr. Hassan led his company and its Action Agenda into third largest merger among our top companies (by dollar amount). For more on the jumping-through-hoops structure of the deal, check out Merck’s profile.

While SP posted the highest jump in revenues on among our Top 20, nearly all of that came from the addition of Organon sales: $3.1 billion out of the $3.7 billion in growth. With Remicade adding $470 million in 2008 sales, the rest of the company’s sales gains were barely enough to offset the decline in Vytorin/Zetia sales. Take away that $3.1 billion, and SP is duking it out with Boehringer-Ingelheim for the #15/16 slot.

As with every other company on this list, currency gyrations wreaked havoc in 1Q09, but even SP’s U.S. marketed products showed weakness. Pharma sales overall (including Vytorin/Zetia) dropped 7% in 1Q09, with Remicade only posting 2% growth in the quarter. Vytorin/Zetia revs fell 21% in the timeframe, from $517 million to $400 million.

The Secret Integration

Meanwhile, SP is still hoping to reap the fruits of Organon’s pipeline. In the company’s annual report, Thomas P. Koestler, Ph.D., executive vice president and president of Schering-Plough Research Institute (SPRI), remarked that SP had eight NCEs in Phase III and four in pre-registration, several of which came along in the acquisition.

In January 2009, SP got a complete response letter from the FDA about its application for Saphris, a treatment for schizophrenia and bipolar I developed by Organon and Pfizer (which bailed out in 2006). The letter didn’t request additional trials, but wanted more info from the existing database, as well as proposed labeling for the drug. The FDA accepted Saphris’ NDA in November 2007, shortly after the Organon acquisition.

Another Organon drug for which SP had high hopes was sugammadex, an injection for reversal of muscle relaxation during general anesthesia. Once considered a blockbuster-in-the-making, sugammadex’s future is cloudy. In August 2008, the FDA sent SP a not-approvable letter for the drug, due to concerns about hypersensitivity and allergic reactions. Sugammadex is currently on the market in the EU as Bridion, and SP still hopes to gain FDA approval. It’s also under review in Japan.

SP got some good news when Simponi, its Remicade followup, was approved by Health Canada in April 2009. As documented in J&J’s profile, SP has (most) non-U.S. marketing rights to Simponi, but J&J is arguing that those rights should revert to them because of the Merck merger. Given that the Biogen/Genentech change-of-control suit took 6 years to settle (see BI’s writeup in the Top Biopharma section), I can imagine that J&J’s going to end up with an additional cut of Simponi’s revenues, in order to facilitate this merger.

While those three products came from outside sources, the company touts its thrombin receptor antagonist (TRA), an acute coronary syndrome treatment, as a “home-grown” product. The antiplatelet product has fast-track designation from the FDA, and is currently in Phase III trials covering almost 30,000 patients worldwide. As with other treatments in this category, it’s a potential blockbuster, but there’s no word on when the company plans to file for approval.

UnENHANCEd

The delay in releasing the results of the Vytorin ENHANCE study continues to leave a pall over SP. I think it’s a testament to the canniness of the Organon acquisition — driven by both its pipeline and its biologics expertise — that Merck acquired SP even while their shared franchise continues to decline in value. (More likely, Merck feels it can mine more out of the products if it’s the sole owner, a la Pfizer and Celebrex/Bextra.)

As for Fred “Turnaround King” Hassan, he told the Wall Street Journal that he doesn’t plan to retire and, at 63, doesn’t have much by way of hobbies. So if your company announces it’s hired him as your new CEO, make sure your résumé’s up to date. . . .

Return to Top Pharma Report homepage.

Headcount: 55,000 (incl. Organon)
Pharma Revenues*: $12,273 (+22%)
Total Revenues*: $15,290 (+22%)
Net Loss: $1,473
R&D Budget: $2,926 (+34%)

Account for 62% of total pharma sales, up from 61% in 2006.

* Pharma revenues include $2.6 billion in Zetia and Vytorin sales. The latter derive from a joint venture with Merck and are not counted as drug revenues by SP. I have reported half of Vytorin/Zetia sales as SP revenues to give a clearer idea of SP’s pharma performance.

PROFILE

Schering-Plough completed its $14.4 billion purchase of Organon in November 2007, so we should expect the results above to jump next year. After 1Q08, pharma revenues came in at $4.1 billion, including $600 million for Zetia/Vytorin. But that’s a mighty big “including.”

Merck, SP’s partner in Zetia/Vytorin, is projecting a $700 million decline in its revenues from their joint venture, after the results of the ENHANCE trial seemed to indicate little value in mega-blockbuster Vytorin. The companies also pulled their Claritin/Singulair combo after an unfavorable response from the FDA. (See Merck’s profile for more on Vytorin.)

One of the company’s key products, Bridion (generically known as sugammadex, acquired with Organon), got priority status from FDA with its January 2008 submission. The EMEA is recommending it for post-surgical reversal of muscle relaxants, but the FDA seems to be delaying its decision, despite unanimous approval from an advisory committee.

In response to the projected drop in Zetia/Vytorin sales, SP has rolled its Organon integration plan into the Productivity Transformation Program, a strategy to generate $1.5 billion in annual savings. SP plans to achieve $1.25 billion of that by 2010. Chairman and chief executive officer Fred Hassan contended that the first part of the plan will be to cut higher management staff, as part of 5,500 (10%) overall layoffs.

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