Schering-Plough selloff worsens on Vytorin concern

NEW YORK (Reuters) - Shares of Schering-Plough Corp (SGP.N) fell a second consecutive day on Tuesday on fears that a failed clinical trial could dampen demand for the company's blockbuster Vytorin cholesterol drug, analysts and money managers said.

Schering-Plough's stock fell $1.74, or 6.8 percent, to $23.78 on the heels of a 7.9 percent decline on Monday.

The company and partner Merck & Co (MRK.N) said on Monday their shared Vytorin failed to halt clogging of arteries better than Merck's older Zocor, which is now sold in inexpensive generic forms.

In fact, slightly more plaque built up in the carotid arteries of patients taking Vytorin during the two-year so-called Enhance trial than those taking Zocor, spurring some doctors to question the benefit of costly Vytorin.

"Vytorin accounts for two-thirds of Schering-Plough's profits, which is why the (stock) market has been so skittish the last two days," said Tom Goetzinger, senior securities analyst with Dreman Value Management LLC.

Goetzinger said earlier assumptions that patients needing a cholesterol fighter for the first time would opt for potent Vytorin, had helped fuel expectations that Schering-Plough profits would grow 24 percent this year and another 17 percent in 2009.

"The market is now saying we're not so confident about those potential new users," he said, and is fretting that insurers and pharmacy benefit managers could steer first-time patients to rival medicines.

"They will be able to argue, 'We're not getting enough benefit to justify the cost'" of Vytorin, Goetzinger said.

Credit Suisse analyst Catherine Arnold said on Tuesday AstraZeneca Plc's (AZN.L) Crestor and Pfizer Inc's (PFE.N) Lipitor could benefit in the short term from the new doubts about Vytorin.