NEW YORK (CNNMoney.com) -- Drugmaker Schering-Plough may have wowed investors with strong second-quarter earnings - but the company has a cholesterol problem.

Schering-Plough, the nation's No. 9 drugmaker, is heavily dependent on its cholesterol-cutting Vytorin franchise - and the company might be headed for a rough patch if it can't expand its pipeline with more promising drugs, analysts say.

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"I think the future of the company over the next few years relies very heavily on these franchises [Vytorin and Zetia,]" said Jon LeCroy, analyst for Natexis Bleichroeder. "Right now their pipeline isn't really that impressive."

Like other Big Pharma companies, Schering-Plough (Charts) might have to acquire some smaller drug makers with rich pipelines - an expensive proposition.

"Perhaps the company needs to buy some existing products," said David Moskowitz, analyst for Friedman Billings Ramsey. "Success is tough to come by in this market because everything is so expensive."

Schering-Plough and Merck (Charts) partnered to produce and market the cholesterol-lowering blockbuster Vytorin, which combines Schering's Zetia with Merck's Zocor. Schering did not break out sales figures for Vytorin, but Merck said the combo reached nearly $500 million in sales for the second quarter.

Zocor was one of Merck's top-selling blockbusters, totaling $4.4 billion in 2005 sales, but its patent expired in June. When a brand-name product loses patent protection and begins competing with cheaper generics, the price of the original product typically plunges. Some analysts are concerned that generic competition could slow Vytorin sales growth - putting a big hurt on Schering-Plough.

"As you'd expect, into the launch of generic Zocor, you will see some flattening" in Vytorin sales, said Moskowitz, adding that's worrisome since Vytorin is "the clear growth engine in the company."

But he also sees the potential slowdown as temporary. "Once we maneuver this period of time .. we wouldn't be surprised if we saw a reacceleration" in sales, said Moskowitz.

Schering-Plough has demonstrated that it can fall down and get back up again. The Kenilworth, N.J.-based drugmaker soundly beat analysts' sales and profits for the second quarter.

The company's earnings growth in 2006 is a stark contrast to its performance in 2005, when the company was losing money as it set aside hundreds of millions of dollars to deal with an ongoing federal investigation of its operations.

In 2005, the drugmaker set aside $500 million for litigation costs as it came under investigation by the Department of Justice and the U.S. Attorney's Office for the District of Massachusetts. The company is being investigated for its marketing, sales, pricing and clinical trial practices.

Schering-Plough spokesman Steve Galpin said the company had yet to resolve these legal issues, but he was confident sales would keep growing under the leadership of chief executive officer Fred Hassan. Hassan took over in 2003, after the problems with corporate practices had already occurred, said Galpin.

"That is something that Fred Hassan has been trying to do ever since he arrived here, to resolve some of the issues of the past," said Galpin.

Vytorin isn't the only success story for Schering-Plough since Hassan took over. Revenue for its top-selling product Remicade, a treatment for arthritis and Crohn's disease, surged 31 percent in the second quarter to $307 million.

Its Claritin-related allergy products also did well, despite the fact that its patent on the $3 billion-a-year blockbuster expired back in 2002. The company's ingenuity in spinning off new, patented versions of Claritin has paid off. Clarinex sales jumped 10 percent to $226 million in the second quarter, while sales for the over-the-counter version, Claritin RX, rose 4 percent to $104 million.

After Schering's strong quarter, some analysts bumped up their projections for the company.

"The quarter's performance was driven by stronger performance than anticipated across most products, but especially in sales of Remicade, Peg-Intron, Nasonex and Clarinex," wrote Al Rauch, analyst for A.G. Edwards, who increased his EPS estimate for 2006 by 13 cents, to 84 cents a share.

Barbara Ryan, analyst for Deutsche Bank North America, also boosted her estimate by 15 cents to 84 cents a share for the year.

But analysts are concerned about the pipeline, heavy with products for hepatitis C and HIV, the virus that causes AIDS. While new drugs and vaccines for these viruses are badly needed for world health, they usually don't translate into sales robust enough to drive up the stock price.

In the case of HIV, much of the treatments are donated, for free or at reduced prices, to patients in sub-Saharan Africa.

So while Schering-Plough might run into some turbulence going forward, Moskowitz at FBR thinks the company is in good hands, prompting him to take a bullish view of the company with a "buy" rating and a price target of $25 a share. The stock was trading near $20 Monday afternoon.

"Hassan has done a very good job improving the business," said Moskowitz, noting that the CEO is a "shrewd negotiator" and has restored morale at the once-beleaguered drugmaker.

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