Schering-Plough to cut costs by $1.5 billion a year

NEW YORK (Reuters) - Schering-Plough Corp (SGP.N: Quote, Profile, Research, Stock Buzz), reeling from calls for dramatically reduced use of its top-selling cholesterol medicines, on Wednesday announced a cost-cutting program aimed at saving $1.5 billion a year.

"Our first actions will be to execute reductions in high overhead cost areas, beginning with reductions in higher management levels in the company's headquarters and elsewhere," Chief Executive Fred Hassan said in a statement.

Schering said the program responds to dramatically intensifying pressures on the pharmaceutical industry, especially new pressures in the United States, and also to the confusion in the U.S. market around the cholesterol-lowering drugs Vytorin and Zetia that the company sells through a joint venture with Merck & Co (MRK.N: Quote, Profile, Research, Stock Buzz).

"Savings and productivity improvements will be realized across the company and around the world. No area will be exempt," Hassan said.

However, he cautioned, "We will not engage in across-the-board cost cutting. We will avoid unwise short-term actions."

Schering-Plough shares are down about 50 percent this year and fell dramatically on Monday after doctors at a major medical meeting urged patients to try older cholesterol drugs before turning to Zetia and Vytorin.

One prominent cardiologist said the drugs should be used only as a last resort.

Among the world's most prescribed, the drugs had annual sales of about $5 billion and account for the majority of Schering-Plough profits. Merck, with a wider portfolio of products, is less dependent on Vytorin sales than Schering, but its shares have also been punished.

Sales and new prescriptions of the drugs have been falling since January, when results of a small, but controversial study were released that showed Vytorin failed to work any better at reversing heart disease than Merck's older cholesterol drug Zocor, which is now available in cheaper generic form as simvastatin. Vytorin combines Zetia and Zocor.