Schering-Plough's cholesterol agent Zetia could be an even larger growth driver than Claritin , CEO Richard Kogan told analysts at the company's annual meeting on July 16.

"When fully established in the worldwide cholesterol management market, Zetia may be more important to Schering-Plough's financial results than Claritin ever was," Kogan said.

Schering-Plough, along with its joint venture partner Merck, filed an NDA for Zetia (ezetimibe) for the reduction of elevated cholesterol in December (¹ Also see "Merck/Schering Zetia (Ezetimibe) Will Be Supported By Three Sales Forces" - Pink Sheet, 17 December, 2001., p. 11).

The company expects approval for monotherapy and for use in combination with statin therapy.

Zetia's launch could come not only at a time when achieving target cholesterol levels is considered to be increasingly important, but also as high dose statin therapy comes under increased scrutiny, Kogan said.

Merck's Zocor has recently been relabeled with updated rhabdomyolysis warnings (² Also see "Merck Zocor Rhabdomyolysis Risk Is Dose-Related, Revised Warning Says" - Pink Sheet, 10 June, 2002., p. 5). Rhabdomyolysis adverse events also promoted the withdawal of Bayer's Baycol and are a key issue in FDA's review of AstraZeneca's Crestor .

Zetia's blockbuster potential is due to its positioning in the cholesterol management market, "one of the largest and fastest growing of the top five therapeutic categories in the world," Kogan said.

"If Claritin was great in a $6 bil. allergy market," he said, "consider Zetia in what is now a $19 bil. cholesterol market, and which by 2007 is projected to be $30 bil."

The National Cholesterol Education Program's Adult Treatment Guidelines, which have encouraged more aggressive pharmaceutical treatments, could focus on combination therapy in its next round (³ Also see "Cholesterol Combo Therapy Will Likely Be More Prominent In ATP IV" - Pink Sheet, 11 June, 2001., p. 10).

Schering-Plough is relying on Zetia to be its next major growth product as the company prepares for Claritin (loratadine) to go off patent, which could take place as early as December.

However, the timing of FDA approval of Zetia, in conjunction with Schering-Plough's potential launch of Claritin OTC, may not allow the company enough time for Zetia sales to ramp up in advance of Claritin's patent expiration.

Schering-Plough continues to work on patient conversion from Claritin to Clarinex (desloratadine). Kogan announced that a third of the total Claritin Rx share has been switched. In addition, 50% new Claritin scripts have been converted to Clarinex.

Schering's presentation highlighted its prospects for organic growth. Kogan noted that Schering-Plough scientists are responsible for the discovery of the company's five most highly featured products in its pipeline - Zetia, Noxafil , Amanex , Sarasar , and CCR5 receptor antagonists.

"I'm convinced, given our size, that these compounds offer the potential to generate greater upside leverage for Schering-Plough than exist at any other big pharma company," Kogan stated.

Kogan used Zetia's pending launch to illustrate the ease with which a smaller company can move revenue with a blockbuster product. Given that the company has less than $10 bil. in sales, he asked analysts to "consider what it takes to move the needle."

With the drug index down about 40% from its high, Pfizer and Johnson & Johnson emphasized in second quarter presentations the positive impact sagging stock prices would have on their share buyback programs. Pfizer has increased its share buyback program from $10 bil. to $16 bil., and J&J has completed $4.5 bil.-$4.6 bil. of its $5 bil. buyback program.

Pressed by analysts, Schering said it has not yet decided whether it will reinstate the company's share buyback program. "Just because Pfizer has a strategy, and just because J&J is doing something, doesn't mean we're going to follow suit. We've never followed suit as a company," Kogan said.

Although Schering-Plough currently has over $1 bil. in cash, the company appears to be reserving it for other strategic options. "Cash seems to be king right now," Kogan said, "and there may be some opportunities we can use that cash for rather than, if you will, a share buyback or financial transaction."

Schering-Plough Zetia Could Be More Important Growth Product Than Claritin

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