EXHIBIT 99.1
FOR RELEASE: IMMEDIATELY Media Contact: Steve Galpin, Jr.
(908) 298-7415
Investor Contacts: Alex Kelly
Janet M. Barth
(908) 298-7436
SCHERING-PLOUGH REPORTS FINANCIAL RESULTS
FOR 2005 FIRST QUARTER
KENILWORTH, N.J., April 21, 2005 - Schering-Plough Corporation (NYSE: SGP) today
reported financial results for the 2005 first quarter.
"Out of the severe challenges that we have faced, we are emerging
stronger," said Fred Hassan, Schering-Plough chairman and CEO. "We are now well
advanced in the Stabilize and Repair stages of our six- to eight-year Action
Agenda and are working toward the Turnaround phase. We continue to make critical
investments in our longer-term future, even as we begin securing our top-line
growth goals and focusing on delivering a sustainable bottom-line turnaround,"
he added.
"Looking back, we can be proud of the progress achieved in our Action
Agenda since we announced it two years ago," said Hassan. "We also know that
much work remains to be done. We are competing in markets that are highly
competitive, seasonal and frequently volatile. Our industry environment is
experiencing heightened competition, rapid changes and a new caution among
regulators, physicians and patients about the safety of medicines. Still, while
the road ahead will be challenging, we have reason for growing confidence. The
hard work by our colleagues across the New Schering-Plough is starting to
deliver significant, positive results. We are delivering on what we said we
would do, and look forward to the anticipated Turnaround beginning later this
year."
Hassan noted that the first quarter 2005 financial performance represented
the second consecutive quarter of higher sales and a clear signal that top-line
growth is starting to drive bottom-line growth. "In defining our anticipated
Turnaround, we think that the beginning of our Turnaround phase will be marked
by two or three quarters of solid performance, as demonstrated by growth in
sales and earnings per share versus prior year quarters, excluding special
items."
The company noted that its base business continues to firm up while its
cholesterol franchise (shared with Merck & Co., Inc.) is making steady progress.
The company said it is also pleased with its improving execution as evidenced by
recent approvals and launches, progress on several compliance
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and legal fronts, and its focus on re-engineering the company through its Value
Enhancement Initiative (VEI).
While the first quarter 2005 results were strong versus the 2004 period,
the company cautioned against projecting out a full-year based on these results,
as certain favorable circumstances helped benefit the first quarter. These
factors included a higher proportional share of ZETIA profits from the company's
Cholesterol Joint Venture, a milestone earned from its Cholesterol Joint Venture
partner, timing of R&D expenses, positive impact of foreign exchange and certain
other items.
Hassan said, "We remain cautiously optimistic that we see the beginning of
positive trends. Working with our partner Merck, our cholesterol franchise is
gaining share in the very competitive and very large U.S. cholesterol market,
and also making progress in several important markets outside this country.
VYTORIN, offering dual inhibition of both sources of LDL cholesterol, is further
penetrating the U.S. market since last year's launch and ZETIA is continuing to
show good strength in spite of the VYTORIN market share progress," said Hassan.
"In our specialty care therapy areas, REMICADE is achieving good sales
growth as it leverages an expanding array of anti-inflammatory indications.
Sales are up significantly versus last year for TEMODAR, which last month gained
U.S. approval after priority review as treatment for the most prevalent form of
brain cancer. Sales for our hepatitis C franchise are benefiting from the
successful launch in Japan late last year of our combination therapy PEG-INTRON
and REBETOL, now the leading therapy in that market. In primary care, we have
increased our U.S. market share for NASONEX nasal spray for allergies. Overall,
we're also pleased with the balance Schering-Plough enjoys between its specialty
and primary care product lines."
Hassan noted that the company continues to make progress in its consent
decree with the U.S. Food and Drug Administration (FDA), having completed 173 of
212 significant steps and 25 of 31 validation actions as of March 31 without
incurring any additional payments for missed deadlines.
Schering-Plough also continued taking steps to improve its financial
flexibility, following on the issuance in August 2004 of $1.4 billion in
Mandatory Convertible Preferred Stock. In the 2005 first quarter, the company
continued to implement its plan to repatriate approximately $9.4 billion in
overseas funds under the American Jobs Creation Act.
FIRST QUARTER 2005 RESULTS
Schering-Plough reported net income available to common shareholders of $105
million in the 2005 first quarter or 7 cents in diluted earnings per common
share compared with a net loss in the 2004 period of $73 million or 5 cents per
share. First quarter earnings reflected special charges of $27 million, or
approximately 2 cents per diluted share, primarily for employee termination
costs. The
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higher earnings in the 2005 first quarter were primarily driven by increased
sales versus the 2004 period and higher equity income from the Cholesterol Joint
Venture with Merck & Co., Inc.
First quarter 2005 net sales of $2.4 billion were 21 percent higher than
the 2004 period. The first quarter sales increase was driven by U.S. and
international product growth, 6 percent of which relates to the U.S. sales
contribution from the antibiotics AVELOX and CIPRO under an agreement with Bayer
that became effective in October 2004, and a 4 percent positive impact from
currency exchange.
The company noted that net sales under U.S. Generally Accepted Accounting
Principles (GAAP) does not include sales of the cholesterol products marketed in
partnership with Merck, as the company accounts for the Cholesterol Joint
Venture under the equity method as described below. Global Cholesterol Joint
Venture net sales, which include VYTORIN and ZETIA, totaled approximately $505
million in the 2005 first quarter, more than double the net sales of $188
million in the comparable 2004 period. U.S. Cholesterol Joint Venture net sales
for the 2005 period totaled $426 million, sharply higher versus $169 million in
2004. VYTORIN has now been launched in 13 countries, including the United
States, and ZETIA in 60 countries. Overall, the company shares in approximately
50 percent of the profits of the joint venture with Merck, although there are
different profit sharing arrangements for the cholesterol products in countries
around the world. Accordingly, including an adjustment of an assumed 50 percent
of global Cholesterol Joint Venture net sales (see note and table below),
Schering-Plough's adjusted net sales for the first quarter of 2005 would have
totaled $2.6 billion, an increase of $564 million or 27 percent, as compared to
$2.1 billion on a similar adjusted basis in the first quarter of 2004.
The company utilizes the equity method of accounting for its Cholesterol
Joint Venture with Merck. Under the equity method, the company records its share
of the income from operations (which includes milestones earned from Merck) in
"Equity income from cholesterol joint venture." "Equity income from cholesterol
joint venture" for Schering-Plough totaled $220 million in the 2005 first
quarter versus $78 million in the first quarter of 2004. The increase in equity
income reflected the quarter's strong sales performance for VYTORIN and ZETIA,
the higher share of ZETIA profits on the first $300 million of U.S. ZETIA sales,
and the recognition of a milestone from Merck related to certain European
approvals of VYTORIN. The company noted that it incurs substantial costs, such
as selling, general and administrative costs, that are not reflected in "Equity
income from cholesterol joint venture" and are borne by the overall cost
structure of Schering-Plough.
On a reported basis, first quarter 2005 sales of Prescription
Pharmaceuticals, which do not include sales of the Cholesterol Joint Venture,
totaled $1.8 billion, up 25 percent, including a favorable impact from foreign
exchange of 4 percent and the sales contribution of AVELOX and CIPRO. Consumer
Health Care sales rose 6 percent to $330 million. Animal Health sales grew 14
percent to
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$193 million, reflecting solid growth across core brands and a favorable foreign
exchange impact of 4 percent.
Among prescription products recording higher sales in the 2005 first
quarter were REMICADE, a treatment for immune-mediated inflammatory disorders
that Schering-Plough markets in countries outside the United States (excluding
Japan and certain Far East markets) for rheumatoid arthritis, early rheumatoid
arthritis, psoriatic arthritis, Crohn's disease and ankylosing spondylitis, and
TEMODAR, a treatment for certain types of brain tumors. Sales for REMICADE rose
33 percent to $220 million, due primarily to greater demand and expanded
indications. TEMODAR sales totaled $131 million in the 2005 first quarter, up 52
percent, benefiting from increased utilization for a new U.S. indication, newly
diagnosed glioblastoma multiforme (GBM), the most prevalent form of brain
cancer. Also posting higher sales in the quarter was CAELYX, for the treatment
of ovarian cancer, metastatic breast cancer and Kaposi's sarcoma, up 27 percent
to $43 million, largely as a result of increased use in treating breast cancer.
In the company's prescription respiratory business, global NASONEX sales
rose 30 percent to $183 million, with U.S. sales climbing 32 percent to $109
million as the product captured greater U.S. market share versus the 2004
period. U.S. sales also benefited from the nationwide availability, announced
Jan. 12, of a new scent-free, alcohol-free formulation of NASONEX nasal spray.
In international markets, NASONEX sales were up 27 percent to $74 million as a
result of market share gains and market growth. Global CLARINEX sales in the
first quarter of 2005 were $144 million, up 11 percent. Sales of CLARINEX
outside the United States rose 26 percent to $77 million in the first quarter
due to market share gains and continued conversion from prescription CLARITIN.
In the U.S., CLARINEX continued to experience reduced market share in a
declining market. As a result, sales decreased 3% to $67 million from an
unusually weak comparable period in 2004. International sales of prescription
CLARITIN rose 22 percent to $111 million in the first quarter, due mainly to a
strong allergy season in Japan.
Sales for the company's hepatitis C products rose in the 2005 first
quarter, driven primarily by higher sales in Japan as a result of the December
2004 launch of the PEG-INTRON and REBETOL combination therapy. In Japan,
PEG-INTRON has become the leading interferon therapy prescribed for the
treatment of hepatitis C. First quarter global sales of PEG-INTRON were up 14
percent to $170 million; sales of REBETOL were down 35 percent to $64 million,
due to ongoing international competition and U.S. market share erosion from
generic competition.
Also contributing to growth in 2005 first quarter net sales were products
under the strategic agreement with Bayer. Under the agreement, Schering-Plough
has exclusive rights in the United States and Puerto Rico to market, sell and
distribute the AVELOX and CIPRO antibiotics and to undertake Bayer's U.S.
commercialization activities for the erectile dysfunction medicine LEVITRA under
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Bayer's co-promotion agreement with GlaxoSmithKline PLC. In the Japanese market,
Bayer will co-market Schering-Plough's cholesterol absorption inhibitor ZETIA
when approved. Sales of AVELOX and CIPRO totaled $110 million in the quarter.
Schering-Plough records its share of LEVITRA results as alliance revenue within
net sales.
In Consumer Health Care, sales of OTC CLARITIN were essentially flat at
$116 million, primarily reflecting increased private label competition. Sales of
foot care products rose 10 percent to $84 million, benefiting from higher sales
of DR. SCHOLL'S FREEZE AWAY wart remover product and the launch of the new DR.
SCHOLL'S MEMORY FIT Insole.
The company's gross margin was 62.5 percent for the 2005 first quarter
compared with 62.3 percent in the 2004 period. Schering-Plough said its ongoing
focus on operational excellence in all key functions, including compliance and
quality, continues to affect the overall cost structure of the company.
Selling, general and administrative expenses rose 18 percent to $1.1
billion in the first quarter of 2005 versus the prior year, primarily reflecting
the previously announced field force expansions to prepare for the U.S. launch
of VYTORIN, the addition in the 2004 fourth quarter of more than 800 Bayer sales
representatives, and increased selling expenses in Europe to support the
continued launch of ZETIA and VYTORIN, coupled with increased promotional
spending, primarily for NASONEX.
Research and development spending for the 2005 first quarter totaled $384
million, up 3 percent. The company expects R&D spending in subsequent quarters
to be higher, reflecting the timing of clinical trials and the progression of
the early-stage pipeline.
The "Other, net" line primarily reflects interest expense from the
long-term debt issued in the 2003 fourth quarter, offset by higher interest
income related to higher cash and cash equivalent balances resulting from the
August 2004 issuance of $1.4 billion in Mandatory Convertible Preferred Stock.
Schering-Plough recorded income tax expense in the 2005 first quarter of
$64 million. This primarily reflected tax expense in international locations,
which was higher due to increased international income.
RECENT DEVELOPMENTS
The company also offered the following summary of recent significant
developments, including:
- Gained U.S. approval for TEMODAR Capsules (announced March 16) for
use in combination with radiotherapy for the treatment of adult
patients with newly diagnosed glioblastoma multiforme (GBM), a form
of malignant brain cancer. The approval was based on data that
demonstrated a significant overall survival benefit in patients who
were treated with
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TEMODAR in combination with radiotherapy. TEMODAR also received full
approval for the treatment of adult patients with refractory
anaplastic astrocytoma (AA), another form of brain tumor.
- Gained U.S. approval of ASMANEX TWISTHALER 220 mcg (announced March
31) for the first-line maintenance treatment of asthma as preventive
therapy in patients 12 years of age and older. ASMANEX is expected
to be available in the United States in the fall of 2005.
- Presented results from a clinical trial conducted in 1,902 patients
with high cholesterol showing that VYTORIN (ezetimibe/simvastatin)
provided greater reduction in LDL ("bad") cholesterol across the
dosing ranges compared to Lipitor. At the most commonly used
starting doses of these two therapies, VYTORIN 10/20 mg decreased
LDL cholesterol by 51 percent compared with 36 percent for Lipitor
10 mg (p<0.001). The results were presented on March 8 at the
American College of Cardiology's 2005 Annual Scientific Session in
Orlando, Fla.
- Gained U.S. approval (announced March 4) and began introducing
CLARINEX-D 24 HOUR Extended Release Tablets for the relief of the
nasal and non-nasal symptoms of seasonal allergic rhinitis (outdoor
allergies), including nasal congestion, in patients 12 years of age
and older.
- Acquired most of the assets of NeoGenesis Pharmaceuticals, Inc., of
Cambridge, Mass., effective February 14, 2005. NeoGenesis was a
privately held biopharmaceutical company focused on applying novel
screening and chemistry technologies to discover and develop small
molecule drugs.
- Reported on a ruling by the Federal Court of Appeals for the 11th
Circuit, based in Atlanta, that Schering-Plough did not violate
antitrust laws in patent litigation settlements involving its
controlled-release potassium chloride supplement K-DUR 20 (potassium
chloride) USP (announced March 9). The company had consistently
maintained that the patent litigation settlements complied with the
law and benefited consumers by allowing generic product to enter the
market two to five years before the expiration of the relevant
patent.
- Reported results of two independent, investigator-initiated
retrospective analyses of real world treatment data comparing the
two approved forms of pegylated interferon, PEG-INTRON versus
Pegasys, both used in combination with ribavirin. The results were
presented for the first time at the European Association for the
Study of the Liver (EASL) 40th Annual Meeting (April 15).
- Reported on the status of the U.S. regulatory application for
posaconazole, an oral agent for invasive fungal infections, which
was filed in the United States and European Union in May 2004. The
company on March 24 reported that the U.S. Food and Drug
Administration had requested an extension of its regulatory review,
and thus the company anticipates FDA action
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on posaconazole by the end of the first half of 2005. Posaconazole
is also under regulatory review in Europe.
FIRST QUARTER 2005 CONFERENCE CALL AND WEBCAST
Schering-Plough will conduct a conference call today at 8 a.m. (ET) to review
the 2005 first quarter results. To listen live to the call, dial 1-877-565-9664
or 1-706-634-5003. A replay of the call will be available starting at
approximately 11 a.m. today through 5 p.m. on April 25. To listen to the replay,
dial 1-800-642-1687 or 1-706-645-9291 and enter the conference ID # 4712425.
A live audio webcast of the conference call also will be available by
going to the Investor Relations section of the Schering-Plough corporate Web
site, www.schering-plough.com, and clicking on the "Presentations/Webcasts"
link. A replay of the webcast will be available starting at approximately 11
a.m. today through 5 p.m. on May 19.
NOTE: Adjusted net sales, defined as net sales plus an assumed 50 percent of
global Cholesterol Joint Venture net sales, is a non-U.S. GAAP measure used by
management in evaluating the performance of the company's overall business. The
company believes that this performance measure contributes to a more complete
understanding by investors of the overall results of the company. The company
provides this information to supplement the reader's understanding of the
importance to the company of its share of results from the operations of the
Cholesterol Joint Venture.
Net sales (excluding the Cholesterol Joint Venture net sales) is required
to be presented under U.S. GAAP. The Cholesterol Joint Venture's net sales are
included as a component of income from operations in the calculation of the
company's "Equity income from cholesterol joint venture."
DISCLOSURE NOTICE: The information in this press release includes certain
"forward-looking" statements within the meaning of the Securities Litigation
Reform Act of 1995 relating to the company's business prospects, trends in top
and bottom line performance, the timing of the anticipated turnaround and
resulting growth prospects, the future impacts of the American Jobs Creation Act
of 2004 and the potential of certain products including ZETIA, VYTORIN, ASMANEX,
CLARINEX-D 24 Hour Extended Release Tablets and posaconazole. Forward-looking
statements relate to expectations or forecasts of future events and not to
historical information. There are no guarantees about any of the forward-looking
statements, Schering-Plough stock or Schering-Plough's business. Actual results
may differ materially from forward-looking statements due to a number of risks
and uncertainties, including the market viability of the company's (and the
Cholesterol Joint Venture's) marketed and pipeline products; possible changes in
business strategies and the ability to successfully
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implement those business strategies; general market and economic factors;
regulations and legislation; label/use changes and concerns of prescribers or
patients relating to Schering-Plough products, other companies' products or
pharmaceutical products generally; existing and new manufacturing issues that
may arise; trade buying patterns; patent positions; litigation and
investigations; and instability or destruction in a geographic area important to
the company. For further details and a discussion of these and other risks and
uncertainties that may impact forward-looking statements, see Schering-Plough's
Securities and Exchange Commission filings, including the company's 8-K being
filed today. The company does not assume any obligation to update any
forward-looking statements.
Schering-Plough is a global science-based health care company with leading
prescription, consumer and animal health products. Through internal research and
collaborations with partners, Schering-Plough discovers, develops, manufactures
and markets advanced drug therapies to meet important medical needs.
Schering-Plough's vision is to earn the trust of the physicians, patients and
customers served by its more than 30,000 people around the world. The company is
based in Kenilworth, N.J., and its Web site is www.schering-plough.com.
# # #
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SCHERING-PLOUGH CORPORATION
Report for the period ended March 31 (unaudited):
(Amounts in millions, except percentages and
per share figures)
First Quarter
-------------------------
2005 2004 %
------ -------- --
Net Sales.................................. $2,369 $ 1,963 21
Cost of Sales.............................. 889 740 20
Selling, General
and Administrative.................... 1,081 914 18
Research and Development .................. 384 372 3
Other, Net................................. 17 36 (52)
Special Charges a/......................... 27 70 (61)
Equity Income from
Cholesterol Joint Venture............. (220) (78) N/M
------ --------
Income/(Loss) Before Income Taxes.......... 191 (91) N/M
Income Tax Expense/(Benefit)............... 64 (18) N/M
------ --------
Net Income/(Loss).......................... $ 127 $ (73) N/M
====== ========
Preferred Stock Dividends.................. 22 - N/M
------ --------
Net Income/(Loss) Available to
Common Shareholders.................... $ 105 $ (73) N/M
====== ========
Diluted Earnings/(Loss) per Common
Share...................................... $ 0.07 $ (0.05) N/M
====== ========
Effective Tax Rate b/...................... N/M 20%
Average Common Shares
Outstanding - Diluted................... 1,480 1,471
Actual Number of Common Shares
Outstanding at March 31................. 1,475 1,472
The Company noted that it incurs substantial costs, such as selling, general and
administrative costs, that are not reflected in the "Equity income from
cholesterol joint venture" and are borne by the overall cost structure of
Schering-Plough.
N/M - Not a meaningful percentage
a/ Special Charges for the first quarter of 2005 related primarily to employee
termination costs for a headcount reduction at a European manufacturing
facility. Special Charges for the first quarter of 2004 included $44 million of
employee termination costs and $26 million of asset impairment charges primarily
related to the Company's anticipated exit from a small European
research-and-development facility.
b/ Tax expense during the first quarter of 2005 primarily related to foreign tax
expense as the company did not recognize the benefit of U.S. tax operating
losses. It should be noted that in the fourth quarter ended December 31, 2004,
the Company recorded the impact of the intended repatriation of funds under the
American Jobs Creation Act.
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SCHERING-PLOUGH CORPORATION
Report for the period ended March 31 (unaudited):
First Quarter
Net Sales by Major Product: -------------------------
(Dollars in millions) 2005 2004 %
------ ------ --
GLOBAL PHARMACEUTICALS $1,846 $1,481 25
Remicade 220 165 33
Nasonex 183 140 30
PEG-Intron 170 148 14
Clarinex / Aerius 144 130 11
Temodar 131 86 52
Claritin Rx* 111 91 22
Integrilin 75 73 3
Intron A 73 69 6
Avelox 73 - N/M
Rebetol 64 99 (35)
Subutex 51 44 16
Caelyx 43 34 27
Elocon 41 38 6
Cipro 37 - N/M
Other Pharmaceuticals 430 364 18
CONSUMER HEALTH CARE 330 312 6
OTC 162 157 4
OTC Claritin 116 117 (1)
FOOT CARE 84 76 10
SUN CARE 84 79 5
ANIMAL HEALTH 193 170 14
------ ------ --
CONSOLIDATED NET SALES $2,369 $1,963 21
====== ====== ==
N/M - not a meaningful percentage
* Includes international sales of Claritin Rx only. Canadian sales of Claritin
are reported in the OTC Claritin line within Consumer Health Care.
NOTE: Additional information about U.S. and international sales for specific
products is available by calling the company or visiting the investor
relations Web site at http://ir.schering-plough.com.
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SCHERING-PLOUGH CORPORATION
Reconciliation of Non-U.S. GAAP Financial Measure
Adjusted net sales, defined as net sales plus an assumed 50 percent of global
Cholesterol Joint Venture net sales.
(Dollars in millions) Three-Months Ended March 31 (unaudited)
----------------------------------------
2005 2004
------- ------
NET SALES, AS REPORTED $ 2,369 $1,963
50 percent of Cholesterol Joint Venture Net Sales(a) 252 94
------- ------
Adjusted net sales $ 2,621 $2,057
======= ======
(a) Total net sales of the Cholesterol Joint Venture for the three
months ended March 31, 2005 and 2004 were $505 million and $188
million, respectively.
NOTE: Adjusted net sales, defined as net sales plus an assumed 50 percent
of global Cholesterol Joint Venture net sales, is a non-U.S. GAAP measure
used by management in evaluating the performance of the company's overall
business. The company believes that this performance measure contributes
to a more complete understanding by investors of the overall results of
the company. The company provides this information to supplement the
reader's understanding of the importance to the company of its share of
results from the operations of the Cholesterol Joint Venture. Net sales
(excluding the Cholesterol Joint Venture net sales) is required to be
presented under U.S. GAAP. The Cholesterol Joint Venture's net sales are
included as a component of income from operations in the calculation of
the company's "Equity income from cholesterol joint venture." Net sales of
the Cholesterol Joint Venture do not include net sales of cholesterol
products in non-joint venture territories.