* Q4 Non-GAAP EPS $0.39 beats $0.30 forecast
* Sales of $4.35 bln vs $4.51 bln forecast
* Shares rose 4 percent in pre-market. (Adds product sales, background on company challenges)
By Ransdell Pierson
NEW YORK, Feb 3 (Reuters) - Schering-Plough Corp reported higher-than-expected quarterly earnings on Tuesday, helped by cost cutting, but sales of its two cholesterol drugs fell sharply amid concerns about their effectiveness.
Schering-Plough said last fall it planned to cut 20 percent of its U.S. sales force to eliminate costs related to its recent purchase of Organon BioSciences. The program is meant to create cumulative savings of $1.5 billion by late 2012.
The company earned $442 million, or 27 cents per share, in the fourth quarter. That compared with a loss of $3.4 billion, or $2.08 a share, a year earlier, when it took charges for the Organon purchase.
Excluding special items, Schering-Plough SGP.N earned 39 cents per share. Analysts on average expected 30 cents, according to Reuters Estimates.
Quarterly sales, including new products from the Organon deal, rose 17 percent to $4.35 billion, a bit shy of the Reuters Estimate prediction of $4.51 billion.
Sales growth was crimped by 6 percentage points by the strengthening dollar, which lowers the value of overseas sales when converted back into U.S. currency.
Revenue from its Vytorin and Zetia cholesterol treatments, sold in partnership with Merck & Co (MRK.N), plunged 26 percent in the fourth quarter to $1.1 billion.
Including its half share of sales from the joint venture with Merck, Schering-Plough revenue in the quarter would have been $4.9 billion.
Schering-Plough is considered a possible takeover target because of its relatively digestable size and because none of its big products face generic competition in the next few years, when many rival large drugmakers face patent expirations.
But it has problems of its own, including waning demand for Vytorin and Zetia — which had been the company’s fastest-growing products until a pair of widely publicized studies questioned their effectiveness and raised concerns of possible cancer risk for Vytorin.
Schering-Plough’s arthritis drug Remicade fared well in the quarter, with sales rising 8 percent to to $491 million. Brain cancer drug Temodar rose 4 percent to $242 million.
Sales of company consumer products fell 14 percent to $219 million, mainly due to inventory-stocking patterns that hurt over-the-counter sales of its Claritin allergy drug.
Schering-Plough is now in a bigger spotlight in view of Pfizer Inc’s (PFE.N) announcement last week that it would buy Wyeth WYE.N in a deal valued at $68 billion.
Some investors expect that transaction to stimulate more consolidation in the industry, whose profits have been hurt by generic competition and failure of drugmakers to launch replacement big-selling medicines. (Reporting by Ransdell Pierson; Editing by Steve Orlofsky and Derek Caney)