Schering, Optimism and Problems
Schering Plough is the maker of Peg Intron and intron
have been looking for weeks to find a news story stating
all the items that they cheated on but I can not.
the largest fine in history, 500.000.000 leads me to
beleive that they must have killed a lot of people.
will never know!
January 15 03:11 PM EST
At Schering, Optimism and Problems
By MELODY PETERSEN The New York Times
hear Schering-Plough executives tell it, the future
is bright. But to many others, the pharmaceutical giant's
prospects are less certain. Pharmacies nationwide
are stocked with Clarinex, the company's new allergy
drug. Schering-Plough is optimistic that Clarinex will
be as big a blockbuster as Claritin, its existing allergy
medication and by far its most important product. And
the company is near an agreement with regulators to
resolve longstanding problems manufacturing the medicines
chief executive, Richard Jay Kogan, predicted last month
that "2001 will be seen as a watershed year, when this
company undertook important changes to remake itself."
to many others, Schering-Plough's prospects are less
certain. The company is facing a possible record government
fine for quality control problems in its factories.
Many drug industry experts are not convinced that Clarinex
is a better drug than Claritin, which it is supposed
to replace. And with its stock roughly 30 percent lower
than it was a year ag! o, Schering- Plough is periodically
mentioned as a takeover candidate.
year "will be a challenging year for Schering-Plough,
and 2003 could be even more so," said Hemant K. Shah,
an independent drug industry analyst in Warren, N.J.
Schering-Plough's troubles began in 1998, although at
the time, few investors knew.
company's sales of Claritin were soaring as it spent
$137 million to advertise the drug, according to Competitive
Media Reporting more than any other company was spending
on a single medicine. Schering-Plough's Claritin ads,
among the first to take advantage of the loosening of
restrictions on pharmaceutical advertising, became ubiquitous,
showing up on television, in magazines, subway cars
and even paper bags from pharmacies.
federal regulators issued three warning letters to Schering-
Plough that year, detailing widespread problems in factories
in New Jersey, Puerto Rico and Ireland.
the next three years, the compan! y received two more
warning letters about similar manufacturing problems,
recalled several defective medicines, and was told by
consultants it hired, according to an internal report
later made public, that some parts of its factory in
Kenilworth, N.J., were "out of control."
the last several years, hundreds of consumers, according
to federal documents, have complained that the company's
bottles of Nasonex, a nasal spray, did not work. And
a Food and Drug Administration official said in an interview
last summer that the agency was investigating whether
patients might have died after Schering-Plough shipped
asthma inhalers that contained little or none of the
medicine that would have helped them breathe during
an attack. The company says there is no evidence that
ties any deaths to its products and that it has done
holding up approval of Clarinex because of the factory
problems, the F.D.A. approved the drug late last month
but at a high pric! e. The company said it expected
to pay a fine of up to $500 million to the government
for its protracted manufacturing problems, five times
the highest penalty a drug company has paid for such
violations. Apart from the fine, Schering-Plough has
spent more than $60 million to clean up its manufacturing
problems, and is adding about 500 employees to its factory
payrolls, many of them specializing in quality control.
needs to keep sales increasing to pay for the manufacturing
problems, particularly since it has not reserved money
to pay the possible fines. But the company is more dependent
on a single product Claritin than almost any other major
of all forms of Claritin accounted for 49 percent of
Schering- Plough's retail pharmaceutical sales in the
United States in the twelve months ended last November,
according to Scott-Levin, a consulting firm, and 34
percent of total worldwide sales in the first nine months
of 2001, acco! rding to the company. The company now
needs to switch patients from Claritin to Clarinex before
the main patent on Claritin expires at the end of year,
which will allow other companies to sell generic versions.
last month, in an attempt to stimulate sales of Clarinex,
the company said the price of the new drug would be
18 percent below Claritin's. But there have been no
studies so far comparing Clarinex and Claritin, and
few drug industry experts say that Clarinex offers significant
advantages over the older medicine.
is already a very safe and effective drug," Mr. Shah
said. "Not all drugs can be improved. Unless you can
tell the consumer that this is a better drug, it will
be difficult to get them to switch."
Shah expects Clarinex to sell well this year, perhaps
reaching $700 million in sales. But he expects sales
of both Clarinex and Claritin to then fall sharply when
the Claritin patent expires, he said. Profits would
follow suit, parti! cularly if Schering-Plough finds
that it has to cut prices sharply to compete with the
Shah and other Wall Street analysts say the company's
stock down more than 30 percent from a year ago could
fall even further. Several investment bankers said that
some of their clients had already looked at Schering-Plough
as a possible takeover target, but the bankers were
not aware of active merger discussions.
executives at Schering- Plough, which has its headquarters
in Kenilworth, declined requests for interviews. But
William O'Donnell, a Schering-Plough spokesman, said
the company believed that it would be able "to establish
Clarinex as an important new therapy."
company's clinical trials have shown, Mr. O'Donnell
said, that patients' allergy symptoms were reduced 24
hours after taking Clarinex.
believe this means patients can wake up and enjoy 24
hours of nondrowsy seasonal allergy relief," he said.
for Clari! tin, however, also promote it as a "once
a day" drug.
O'Donnell said Schering- Plough expected its earnings
to grow this year by the "low double-digits."
is working closely with the F.D.A. to resolve the manufacturing
issues, he said, although the final terms of the settlement
agreement with the government are still unclear.
company does not talk, Mr. O'Donnell said, about merger
or takeover speculations.
is determined not to let its sales slip away. Mr. Kogan
told analysts last summer that the company would "be
very aggressive" in marketing Clarinex, once it was
Kogan also said at the time that the company did not
plan to let generic companies start selling Claritin
when the product's main patent expires in December.
company has secondary patents on Claritin that extend
beyond 2002, Mr. Kogan said. "We will defend our patents
added. The company has spent million! s of dollars lobbying
in Washington in recent years, trying to get lawmakers
to pass legislation that would extend the expiration
date of Claritin's patent because they say the drug's
approval was held up for too long at the F.D.A. But
so far, those attempts have failed.
Leonard S. Yaffe, an industry analyst for Banc of America
Securities, said he was expecting a generic version
of Claritin to hit pharmacy shelves in December, when
the first patent on the drug expires. And he expects
the decline of Claritin and Clarinex sales to be very
sharp, similar to the decline in sales of the antidepressant
Prozac, which lost its patent protection last summer.
Eli Lilly's sales of that drug fell more than 70 percent
within three months after Barr Laboratories, a maker
of generic drugs, began selling a lower- priced version
of the drug.
has been an aggressive marketer of many of its drugs.
Last year, the Federal Trade Commission charged Schering-Plou!
gh with paying two generic drug makers not to sell cheap
versions of K- Dur 20, a potassium chloride supplement
made by Schering-Plough. The company is vigorously contesting
the government's allegations.
addition, in the last couple of years, many patients
with hepatitis C have complained about Schering- Plough's
marketing of two expensive treatments. The company bundled
the two drugs together, charging about $18,000 for the
needed year's worth of treatment and refusing to sell
one without the other.
argued that for safety reasons, the drugs should only
be taken together, but patients who had wanted to take
one of the drugs in combination with another company's
have coerced patients into buying both products," said
Brian D. Klein, co-founder of the Hepatitis C Action
and Advocacy Coalition, a patient group. "They have
not made many friends through their marketing tactics."
has several promising d! rugs in its research pipeline,
which could eventually help offset a decline in Claritin
a promising new asthma drug, could be approved by the
F.D.A. this year. Dr. Yaffe said maximum annual sales
of Asmanex could reach more than $1 billion.
and Merck also recently teamed up to file for approval
of Zetia, a new type of cholesterol drug.
the new drugs, Dr. Yaffe said, will not begin lifting
revenue significantly until 2004.
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