默克藥廠 (MRK) 2002 Q2 法說會逐字稿

Good Morning, my name is Jason and I will be your conference facilitator today.

At this time, I would like to welcome everyone to the Schering-Plough conference call.

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If you should need any assistance in the conference, please press star then 0 and an operator will come back on line to assist you.

Thank you, Ms. Foster, you may now begin your conference.

Thank you.

This is Geri Foster.

Good morning and welcome to Schering-Plough's quick call for the second quarter.

I thank you for joining today's quick call to review Schering-Plough's 2002 second quarter earnings.

The safe harbor statement that appears in our earnings press release also covers the information provided in this call.

The press release includes certain forward-looking statements, actual results may differ materially from those projected in the forward-looking statements.

Please read the disclosure notice at the end of the press release.

The format of today's call will follow the same format as all of SGP's previous quick calls.

Today's earnings release is posted on Schering-Plough's web site at www.sgp.com.

Please read the printed release.

The call is also being web cast.

So let's proceed.

As you know, we previously announced second quarter earnings per share of 43 cents in a press release on July 16th.

Today, we have provided with you a consolidated income statement and product sales.

Before we review the income statement and cover the highlights of the second quarter, I want to review the Claritin trade inventory update as discussed in today's release.

As you all know, we have been reporting on the financial impact of the anticipated elimination of Claritin trade inventories and previous press releases and in our SEC filings.

And we have a section of Claritin trade inventory in today's release.

SGPs 2002 earnings projection of a midsingle digit percentage increase in earnings per share includes the previously reported anticipated elimination of trade inventory levels of prescription Claritin products, which is expected to have a negative impact on pretax profit for the remainder of 2002 of approximately $250 million.

The $250 million is the same number that has been reported previously.

Now, let's go to SGP's expectations for Q3 and Q4, 2002.

The majority of the Claritin trade inventory held by U.S. wholesalers is expected to be eliminated in the 2002 third quarter.

As a result, we said in today's release that 2002, Q3 earnings per share are expected to be significantly lower than Q3, 2001; however, we also said Q4, 2002, earnings per share are expected to be significantly higher than Q4, 2001, due to the continued growth of new products.

Despite the quarterly earnings variability, the company reiterated its projection today of a mid-single digit percentage increase in earnings per share of 2002.

Now, let's proceed with a review of the income statement for Q2.

Sales, consolidated sales for Q2 were $2.8 billion, up 8%.

Worldwide pharmaceutical sales were 2.5 billion, up 11%.

U.S. pharmaceutical sales were up 3% to 1.4 billion.

International pharmaceutical sales were up 24% to 1 billion.

The first $1 billion quarter in the history of Schering-Plough's international division.

R&D was up 7% to 357 million for Q2.

Research spending is a reflection of the timing of projects moving into the clinic and clinical trials.

For 2002, we expect to spend about 1.4 billion on R&D.

Margins, the gross margin ratio was 76.2% versus 79.6% in Q2, 2001, and the cost of sales ratio was 23.8%, versus 20.4%.

As we have said many times, and we are saying again, we believe the gross margin ratio should be lower, and the cost of sales ratio should be higher for the year 2002 over the year 2001.

Primarily due to higher royalty payments, particularly from the Intron franchise and to a lesser extent from increased manufactoring costs.

SG&A.

SG&A's up 4% for the quarter with a ratio of 35.1% as a percent of sales versus 36.5% in Q2 last year.

SG&A spending tends to increase to support new product launches.

Right now, we're continuing with the launches of Clarinex and Peg-Intron Rebetol in the U.S., in Europe, and Intron A with Rebetol in Japan.

Tax rate, the 23% tax rate was set in the first quarter, and we expect it to remain the same for the full year, 2002.

I will now discuss sales by major therapeutic category as found in your press release.

We'll do allergy respiratory first.

Clarinex had a great Q2 with sales of 173 million worldwide.

U.S.

Clarinex sales were 137 million and captured around 17% market share of new prescriptions during the spring allergy season.

In addition, in the U.S., more than 80% of all covered lifes under managed care now have access to Clarinex.

It's on 75% of all managed care formularies and on the Medicade formularies of 48 states.

We set a goal of reaching 55% consumer awareness in 12 months for Clarinex, and we achieved 60% awareness in only three months.

Internationally, sales of Clarinex were 36 million reflecting the recent introduction of Clarinex into many international markets and the switch from Claritin to Clarinex.

Nasonex, our nasal-inhaled steroid for allergies was down 45% worldwide to 101 million for the second quarter.

Nasonex was down 63% in the U.S. to 54 million primarily due to the timing of product shipments and changes in trade inventory levels versus Q2 last year when Nasonex recorded its higher sales for the year 2001.

Also, as we said at our July 16th meeting, we lost share in the U.S. this year as a result of our focus on the Clarinex launch, and we have since taken steps to regain that share.

International sales of Nasonex in Q2 were up 25% to 47 million due to market share gains.

Internationally, Nasonex is number one and the fastest growing nasal-inhaled steroid product.

We are still awaiting approval in the U.S. for the [Asmonex] dry powder inhaler.

Our next generation oral inhaled steriod for asthma. [Asmonex] has been approved in 24 international countries.

Now let's go to the anti-infective anticancer products.

Sales of the Intron franchise more than doubled worldwide to 659 million.

Sales in the U.S. more than doubled and were 377 million due to the October 2001 launch of Peg-Intron and Rebetol combination therapy for hepatitis C. Patients continue to be enrolled through the waiting list of the access-assurance program, and patients continue to move off the list into treatment.

We hope to eliminate the weight lift by the end of the third quarter of this year.

International sales of the Intron franchise were up 67% to 282 million.

Mainly due to the launch of the Intron Rebetol combination therapy in Japan.

We more than doubled our InterFerron market share in Japan going from less than 20% to nearly 50% in the six months since launching the combination.

The Intron franchise also continued to do well in Europe and Latin America.

Sales of Temidar for brain cancer are progressing nicely in 74 million in worldwide sales for the quarter, up 68%.

This was due to market share gains in both U.S. and international, which reflects increased utilization.

Remicade sales more than doubled to 76 million in Q2 versus 36 million last year due to market share gains.

As a reminder, we sell Remicade only in the international market.

Now, let's go to cardiovasculars.

Integrilin sales were 78 million, up 16% worldwide for Q2 due to increased utilization. [INAUDIBLE] is down due to generic competition.

This generic competition was first reported to you in the fourth quarter of 2001.

As you know, on December 27, 2001, Merck/Schering-Plough pharmaceuticals filed an [NDA] in the U.S.for Zedia, our cholesterol absorption inhibitor to be administered alone or in combination with all marketed statins for the reduction of elevated cholesterol levels.

It was accepted with the standard review.

Also, the fixed combination, single tab let of Zedia and Zocor is in early phase clinical trials on our product pipeline.

Now, let's go to Derms.

Worldwide sales were down 36% from Q2 to 112 million.

As we continue to say, Derms are a category you can only trend line on an annual basis.

This category has also been impacted by generic competition.

Just a quick mention regarding other pharmaceuticals of 209 million, up 28% worldwide.

This category includes a number of older products in both the U.S. and international areas.

Annual health at 171 million was basically flat resulting from lower U.S. sales due to product availability issues, tempered by growth and international markets.

Foot care, sun care, and OTC sales are available on the table in your press release.

That's it for Q2, I'll leave you with one final item that was a post-Q2 event.

Claritin was approved in Japan in July, and we are looking forward to the launch once we receive pricing approval.

Also, if you have not listened and viewed the web cast of our July 16th meeting, we would urge you to do so.

It's available on our web page at www.Schering-Plough.com.

Thank you, we're always happy to hear any comments you may have.

Thank you for participating in today's Schering-Plough conference call, you may now disconnect.