Summary
Schering-Plough Corporation's 2008 10-K filing reveals a year of significant sales growth, driven largely by the transformative acquisition of Organon BioSciences N.V. (OBS) in late 2007. Consolidated net sales increased by 46% to $18.5 billion, with the OBS acquisition contributing $5.4 billion. The company's strategy, the 'Action Agenda,' continued to focus on scientific innovation and growth, with R&D spending increasing to $3.5 billion. However, the company faced challenges, notably a 11% decline in global sales for its key cholesterol franchise, VYTORIN and ZETIA, due to market pressures and negative publicity surrounding the ENHANCE clinical trial results. Despite the revenue growth from OBS, the company's financial performance was impacted by significant purchase accounting charges related to the acquisition, including $3.8 billion in acquired in-process R&D in 2007 and $1.4 billion in amortization of fair value adjustments in 2008. The company also highlighted ongoing litigation and investigations, particularly those related to the Merck/Schering-Plough Cholesterol Joint Venture, which could have future impacts. Looking ahead, Schering-Plough anticipated continued R&D investment and expected lower U.S. sales for its cholesterol products in 2009.
Financial Highlights
53 data points| Revenue | $23.85B |
| Cost of Revenue | $5.58B |
| Gross Profit | $18.27B |
| R&D Expenses | $4.80B |
| SG&A Expenses | $7.38B |
| Interest Expense | $251.00M |
| Net Income | $7.81B |
| EPS (Basic) | $3.65 |
| EPS (Diluted) | $3.63 |
| Shares Outstanding (Basic) | 2.14B |
| Shares Outstanding (Diluted) | 2.14B |
Key Highlights
- 1Consolidated net sales increased 46% to $18.5 billion in 2008, largely due to the acquisition of Organon BioSciences N.V. (OBS).
- 2Research and Development (R&D) expenses increased by 21% to $3.5 billion, reflecting a continued focus on innovation.
- 3The cholesterol franchise (VYTORIN and ZETIA) saw a 11% global sales decrease, with a 24% drop in the U.S., impacted by market challenges and clinical trial reviews.
- 4Significant purchase accounting adjustments related to the OBS acquisition amounted to $1.4 billion in 2008, impacting gross margin.
- 5Schering-Plough's international sales represented 70% of total net sales, highlighting a strong global footprint.
- 6The company is actively responding to ongoing litigation and investigations, notably those concerning the Merck/Schering-Plough Cholesterol Joint Venture, which could pose future risks.
- 7Despite revenue growth, the company incurred $329 million in special and acquisition-related charges in 2008 related to integration and cost-saving programs.