07.16.09
#12 Schering-Plough
2000 Galloping Hill Rd., Kenilworth, NJ 07033
Tel: (908) 298-4000Fax: (908) 298-7653
www.schering-plough.com
Headcount | 51,000 | |
Year Established | 1971 | |
Pharma Revenues* | $16,534 | +29% |
Total Revenues* | $20,783 | +36% |
Net Income | $1,903 | n/a |
R&D Budget | $3,529 | +21% |
2008 Top Selling Drugs | |||
Drug | Indication | Sales | (+/-%) |
Zetia/Vytorin* | cholesterol | $2,281 | +34% |
Remicade | anti-inflammatory/autoimmune | $2,118 | +29% |
Nasonex | allergic rhinitis | $1,155 | +6% |
Temodar | oncology (brain) | $1,002 | +16% |
PEG-Intron | hepatitis C | $914 | flat |
Clarinex | allergy | $790 | -1% |
Follistim | women's reproduction | $577 | n/a |
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.
The Lowe Down
And this is Schering-Plough’s last appearance on one of these lists as well. It feels strange to be writing about the event, since the company has had rumors of buyouts and mergers running through it for over 20 years. It was remarkable, in a way, to see one of them finally coming true. As I write, the arrangement of the final merger with Merck is unknown, since J&J is still (understandably) mixed up in the business (q.v.). But I assume that things will work out, with generous shovelfuls of money used to smooth out any seams in the paving. The size of those shovelsful, though, will determine how bad the inevitable research cuts will have to be. I can’t help it; I’m not happy about these things. Some of S-P’s research culture worked out pretty well, some not so well. But it was there own, and that’s not going to be the case any more. I still think that we need as many different viewpoints, as many different wrong-until-they’re-right ideas as we can get in this business. Read John Donne for the rest — you know the part I mean, with all those islands and tolling bells.—Derek Lowe |
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.
Divide & Combo
In May 2009, SP and Novartis revamped their asthma/COPD pact. SP took exclusive worldwide rights to develop a fixed-dose combo of Asmanex and Novartis’ Foradil, while Novartis got the rights to develop a fixed-dose combo of Asmanex and indacaterol, a beta-2 agonist that’s in development. SP’s combo is in Phase III for COPD, while Novartis’ is in Phase II for both indications. Novartis’ combo is going to employ SP’s Twisthaler dry powder device, so SP will garner royalties off those sales. The companies began this collaboration in 2002. |
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. . . .
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