Sales of Schering-Plough's OTC Claritin (loratadine) allergy drug rebounded from a poor second quarter but the impact of the switch from Rx status continued to drag down the firm's overall earnings.

Claritin accounted for sales of $107 mil. in the third quarter - a 22% increase over the drug's second-quarter sales of $88 mil.

The non-sedating antihistamine's second-quarter performance represented about a 30% drop when compared to first-quarter revenue of $125 mil.

By comparison, sales of Wyeth's competing Alavert allergy drug were $25.8 mil. for the third quarter. Second and first quarter sales of Alavert were $31 mil. and $21 mil., respectively.

The third quarter was the first full three-month period for the company's Consumer Health Care Division under the watch of Chairman Stanley Barshay who joined Schering in July.

The uptick in sales comes at a time when the Claritin brand is coming under increased competition from generic loratadine offerings.

"The negative comparisons caused by the loss of prescription Claritin will continue into the fourth quarter," Chief Financial Officer Jack Wyszomierski said during an Oct. 22 earnings call. Rx Claritin sales were down 83% in the quarter to $68 mil. compared with $402 mil. in the prior-year period.

"Also beginning this quarter, the company now has additional private label competition from the OTC Claritin line," Wyszomierski added.

Consumer Health Care reported revenue of $230 mil. compared with $110 for comparable period in 2002. Overall, Schering sales of $2 bil. for the third quarter were down 16% versus the same period last year.

The company reported a net loss of $265 mil. in the quarter compared to net income of $429 mil. in 2002.

On the Rx side, global sales of Clarinex (desloratadine) increased a modest 3% to $159 mil. compared to the same period in 2002; however, U.S. sales of $128 mil. were down by the same amount for the quarter indicating further erosion in the company's allergy business.

"The U.S. allergy market has contracted by close to one-third since the OTC switch of prescription Claritin last year, placing additional premiums on market share gains," Global Pharmaceutical Business President Carrie Cox explained during the call.

"The decision at Schering-Plough to cut the primary care sales force last year reduced our share in the allergy and respiratory arena to sub-optimal levels in this promotionally-sensitive category. We have re-deployed sales force to support this high-margin business," Cox added.

Clarinex' lagging performance in the U.S. was offset by a strong showing in international markets, where the drug accounted for $41 mil. in sales, a 31% increase over the prior year.

Schering claims that Clarinex has increased its share of the allergy market in Europe from 15% to 18% since the beginning of the year.

In addition to diminished Rx Claritin sales, the net loss reflects a $350 mil. increase to Schering's litigation reserves related to investigations into the firm's sales, marketing and clinical practices being conducted by the U.S. District Attorney's Office for the Districts of Massachusetts and Eastern Pennsylvania.

"A final settlement could be less than accrued by the company or materially more than accrued by the company," Wyszomierski maintained.

In the meantime, CEO Fred Hassan says he has been working closely with FDA to resolve Schering's manufacturing issues as part of its consent decree with the agency.

Hassan said: "It occupies a big part of my time because I am staying very close to it. I am pleased to report we are making progress in our relationship with the FDA. I personally met with senior FDA staff four times now including a meeting last week in Puerto Rico. We're building a level of trust."

Hassan recently claimed that the firm had completed 64 of the 222 "Significant Steps" listed in its GMP work plan as a part of the consent decree (¹ Also see "Schering Compliance Appointment Reflects Hassan’s Pursuit Of GMP Closure" - Pink Sheet, 13 October, 2003., p. 10). On Oct. 17, Schering appointed Robert Boisclair senior VP-Global Supply Chain. Boisclair, who comes from Merck, will report directly to Hassan.

Schering Continues To Feel Symptoms From Claritin Switch With Net Loss

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