Summary
Schering-Plough Corporation (MRK) reported third-quarter 2001 net sales of $2.382 billion, essentially flat compared to the prior year. For the first nine months of 2001, net sales decreased by 1% to $7.330 billion. While reported sales showed minimal change, adjusted for foreign currency, sales grew 2% in the quarter and 1% year-to-date, though volume declined. Declining U.S. sales were attributed to manufacturing issues and inventory adjustments, while international sales showed stronger growth. Diluted earnings per share (EPS) for the third quarter increased slightly to $0.41 from $0.40 in the prior year, but year-to-date EPS declined to $1.22 from $1.25. The company faces significant headwinds related to patent expirations and potential generic competition, particularly for its blockbuster drug CLARITIN, with the compound patent set to expire in June 2002. The report highlights ongoing legal battles with thirteen generic manufacturers attempting to market loratadine early. Furthermore, manufacturing issues, including deficiencies in Good Manufacturing Practices (GMPs) at U.S. facilities cited by the FDA, have impacted sales and operations. The company is undertaking extensive measures to address these GMP issues, including adding personnel and upgrading facilities.
Key Highlights
- 1Third-quarter net sales were $2.382 billion, flat year-over-year, while nine-month net sales declined 1% to $7.330 billion.
- 2Diluted EPS for Q3 2001 was $0.41, up from $0.40 in Q3 2000, but year-to-date EPS decreased to $1.22 from $1.25.
- 3CLARITIN sales increased 5% for both the quarter and the nine-month period, reaching $828 million and $2.471 billion, respectively, but are at risk due to impending patent expiry in June 2002 and potential generic competition.
- 4Manufacturing issues, including FDA-cited GMP deficiencies, negatively impacted U.S. sales and led to increased cost of sales.
- 5International sales showed resilience, growing 7% (13% excluding currency) in the third quarter and 6% (13% excluding currency) year-to-date.
- 6Significant litigation is ongoing related to patent challenges for CLARITIN and other products, as well as various antitrust and regulatory investigations.
- 7The company is investing in resolving manufacturing quality issues and strengthening its quality assurance and manufacturing operations.