Drop in Vytorin, Zetia use hits Schering stock

NEW YORK (Reuters) - Total U.S. prescriptions for Schering-Plough Corp SGP.N and Merck & Co Inc's MRK.N cholesterol drugs, Vytorin and Zetia, fell 9.5 percent from October to November, Schering-Plough said on Thursday, accelerating a year-long decline.

The shares of Schering-Plough, which is more dependent than Merck on the two blockbuster drugs for earnings growth, fell 3.4 percent, bucking gains for the pharmaceutical sector.

Vytorin and Zetia sales have plunged this year, along with the share prices of the two companies, because two clinical trials led to questions about the effectiveness of the medicines.

One of the studies also contained data that suggested a possible association with cancer risk, but the drugmakers and some researchers said that data was likely due to chance.

Prescriptions of Vytorin and Zetia fell from 2.19 million to 1.98 million in November, the first time monthly prescriptions of the cholesterol franchise have fallen below 2 million this year, Schering-Plough said in a filing with the Securities and Exchange Commission.

Total U.S. monthly prescriptions have now fallen 39 percent since January, when the first controversial study shook investors.

In Thursday’s filing, Schering-Plough cited statistics from IMS Health, a widely used pharmaceutical information firm.

The monthly decline for Zetia and Vytorin was steeper than the 6.3 percent decline for the overall cholesterol market, said Schering-Plough, which co-markets the drugs with Merck.

Caris & Co analyst David Moskowitz said prescriptions were “exceptionally weak across the board” over the Thanksgiving holiday. He said prescriptions were strong the week after November -- data not captured in Schering’s monthly disclosure.

“It’s very hard to gauge the real data in a holiday week or month,” Moskowitz said. “In my opinion, the numbers are skewed and Schering could possibly trade back up when people realize that those are not the real trends.”

Even though he views the November trend as an anomaly, Moskowitz said: “My estimates and the market’s assessment of Zetia/Vytorin is that franchise is going to continue to be on the decline for the next several years.”

Mike Krensavage, principal at Krensavage Asset Management, agreed the data seemed skewed by the holiday, but said sales of the two drugs would continue to suffer until long-term data on their ability to prevent heart attacks becomes available in 2011 or 2012.

“There’s a vacuum of data and it seems like the medical community will need conclusive data the drugs save lives,” Krensavage said. “We just don’t have that yet.”

Several analysts also noted that November is a shorter month than October.

“We think that it was principally calendar driven,” Skip Irvine, a spokesman for the Schering-Plough/Merck joint venture, said of the monthly decline.

Credit Suisse analyst Catherine Arnold said in a research note that Schering-Plough’s shares were likely also being hurt by investor selling after a week of strong gains.

Merck said earlier this month it expects combined sales of Vytorin and Zetia to fall in 2009, due to flagging U.S. demand for the products.

Schering-Plough shares were down 59 cents at $16.99 in afternoon trading on the New York Stock Exchange. Merck shares were up $1.07, or 3.9 percent, at $28.19, while the American Stock Exchange Pharmaceutical index .DRG was 1.2 percent higher.

Reporting by Lewis Krauskopf and Ransdell Pierson, editing by Tim Dobbyn and Andre Grenon