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Schering 1Q net rises 22%
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May 2, 2000: 9:28 a.m. ET
German drug maker powered by U.S. sales, multiple sclerosis treatment
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LONDON (CNNfn) - German pharmaceuticals company Schering reported Tuesday a 22 percent increase in first-quarter profit on strong sales of its Betaferon multiple sclerosis treatment and hearty U.S. growth, and forecast earnings growth of about 15 percent for the whole of 2000.
The Berlin-based company, a leading maker of birth-control and fertility therapies, said earnings rose to  106 million ($97.1 million), or 1.61 per share, in the first quarter of 2000, from 87 million, or 1.29 a share, a year ago. Schering said analysts' expectations averaged earnings 1.48 a share.
Revenue rose 25 percent to 1.04 billion.
Schering (FSCH) stock rose 1.3 percent to 157.50 by midday Tuesday. The shares got a lift last month after the company announced plans for a public offering of its genome unit.
"They broadly met expectations," said Anthony Colletta, an analyst with Dresdner Kleinwort Benson in London. Colletta rates the company's shares a "buy", forecasting they will reach 170 by the end of the year.
Schering, a niche player whose products target only about 4 percent of the pharmaceuticals industry, is positioning itself as a hybrid of a conventional drug maker and a high-growth biotechnology firm.
Colletta questioned the company's plan to take public the genome research business, saying it amounts to an effort to squeeze greater market value out of a unit that may not deserve a higher valuation than it already has. But company executives said a spin-off of the unit would unlock the value of discoveries for which Schering itself has little use because of its relatively narrow focus.
Open to deals
After years of high-speed consolidation among pharmaceuticals makers, executives of Schering say they haven't ruled out a deal. Among companies currently betrothed are U.S. partners Warner-Lambert (WLA: Research, Estimates) and Pfizer (PFE: Research, Estimates) and British compatriots SmithKline Beecham (SB-) and Glaxo Wellcome (GLXO). France's Rhone-Poulenc and Germany's Hoechst merged to form Aventis [PFE:PAVE] last December.
"We are always open [to a merger offer]," Schering's vice chairman and chief financial officer Klaus Pohle told CNNfn.com Tuesday. A prospective partner, though, "would have to show us a better business model than ours - and we haven't seen that yet."
As a niche player, "we could be as successful as bigger companies -- the name of the game is earnings growth," said Pohle. He declined to comment on whether the company recently has been in merger talks.
Schering agreed in January to buy Japan's Mitsui Pharmaceuticals for 123 million, and last October acquired French nuclear medicine provider ORIS/CIS Bio International from the French Atomic Energy Commission.
Behind the numbers
The company said first-quarter sales in its therapeutic products division, which makes Betaferon, climbed 31 percent to 329 million, accounting for nearly one-third of company revenue. Betaferon alone, a multiple sclerosis treatment that originates from biotechnology research, saw its sales jump 36 percent.
Sales in the diagnostics business, which provides a product used with magnetic resonance imaging, rose 27 percent, and the fertility and hormone therapy unit reported a 15 percent rise in sales.
Schering said it plans to increase capital expenditure to 186 million this year from 163 million in 1999, focusing on expansion in the United States. U.S. sales rose 49 percent, with analysts saying that was partly due to an 8 percent price increase. 
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Schering
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