Schering to slash jobs after cholesterol pill setback

SCHERING-PLOUGH is to cut 10 per cent of its jobs and shut plants to save $1.5 billion annually to counter losses from its cholesterol pill Vytorin.

The cutback announcement came two days after a panel of doctors said that Vytorin should not be used as an initial treatment. The panel recommendation may erode sales of Vytorin and Schering's Zetia - which reached a combined $5 billion last year - by 24 per cent this year, according to Jim Kelly, a Goldman Sachs analyst.

Schering-Plough employs about 1,400 people in Ireland at three separate plants - at Rathdrum and Bray, Co Wicklow, and at Brinny, Co Cork.

Shares in the company rose 99 US cents, or 7.1 per cent, to $14.85 in early trade in New York yesterday. The stock had lost 29 per cent after a panel of cardiologists announced on March 31st that Vytorin worked no better in reducing plaque in neck arteries than Merck's Zocor, a medicine available generically at a fifth of the cost.

"We are determined to control our own destiny," said Fred Hassan, Schering's chief executive, in a conference call in which he discussed the cuts with analysts. "We are taking the tough action now."

Mr Hassan said that Schering would trim 10 per cent of costs based on 2007 spending. The cuts would be on general and administrative spending, research and development, and manufacturing. He declined to provide details. No area would be exempt, including top management, Mr Hassan said. About $500 million of the cuts were previously announced in Schering's November 2007 acquisition of Organon BioSciences. The company employs 55,000 people, according to its website.

Besides cost-cutting, the company plans to steer resources into higher-priority projects, such as an experimental medicine for blood clots called TRA, Mr Hassan said.

The strategy resembles one Schering used in 2003 after it lost patent protection for its Claritin allergy medicine, said Michael Krensavage, an analyst with Raymond James in New York. - (Bloomberg)