April 19 (Bloomberg) -- Schering-Plough Corp. said first- quarter earnings rose 52 percent on demand for the cholesterol drugs Vytorin and Zetia. The company's shares had their biggest gain in seven years.

Net income increased to $565 million, or 36 cents a share, from $372 million, or 24 cents, a year earlier, the company said today in a statement. Revenue jumped 17 percent to $3 billion. Profit beat analysts' estimates as sales of all of the drugmaker's top nine products rose at least 10 percent.

Zetia and Vytorin, a product that combines Zetia with Merck & Co.'s Zocor, helped Schering-Plough turn profitable during the past two years. The company agreed last month to buy Akzo Nobel NV's Organon unit to gain the third-largest maker of birth control pills and five experimental medicines, which will help lessen its dependence on cholesterol-related revenue.

``All of their franchises all did very well, particularly their cholesterol franchise, which was much stronger than anybody expected,'' said Joseph Tooley, an analyst at A.G. Edwards in Chicago, in a phone interview today. Progress in the pipeline is also ``very positive,'' for the stock, he said.

Shares of Kenilworth, New Jersey-based Schering-Plough climbed $2.45, or 8.6 percent, to $31 at 3:59 p.m. in New York Stock Exchange composite trading. It was the stock's biggest one- day percentage gain since April 2000.

Profit excluding three upfront licensing payments was 42 cents a share, the company said. On that basis, earnings beat the 29-cent estimate of 15 analysts surveyed by Bloomberg.

Cholesterol Drug Sales

The joint venture with Merck on cholesterol drugs generated $1.2 billion in sales, with Vytorin increasing 66 percent to $616 million and Zetia rising 31 percent to $544 million.

The two companies split the revenue from Zetia and Vytorin, and the cholesterol drugs aren't included in Schering's reported net sales. Vytorin won U.S. regulatory approval in July 2004, and Zetia was cleared in October 2002.

Zetia works differently from other cholesterol drugs, blocking absorption of cholesterol from food in the digestive tract. Zocor and Pfizer Inc.'s Lipitor block cholesterol production in the liver. Vytorin combines Zetia with Zocor to target both sources of cholesterol.

The availability of lower-cost generic Zocor pills, which were introduced in June, doesn't seem to have affected demand for Vytorin and Zetia, analyst Tooley said. He has a ``buy'' rating on the shares and doesn't own any.

Organon Acquisition

Schering-Plough plans to complete its $14.4 billion purchase of Organon by the end of the year. Organon generated $6.4 billion in sales last year of animal health products and drugs such as the birth-control pill Marvelon and the implantable contraceptive Implanon. Only Bayer AG and Johnson & Johnson sell more birth- control products.

Organon has five products in late-stage clinical testing. Combining the two companies' overhead costs will save Schering- Plough at least $500 million over the next three years, Chief Executive Officer Fred Hassan said today on a conference call.

Analysts said they are also optimistic about Schering- Plough's own products in development. Research spending rose 47 percent to $707 million in the quarter as more drugs entered later stages of testing. The company announced yesterday that it is beginning the final stages of testing for its experimental anti-clotting drug with two trials involving 29,500 patients.

``We expect that Schering-Plough's earnings may compound at nearly twice that of the market over the next few years, conspicuously ahead of other drug companies,'' said Barbara Ryan, an analyst at Deutsche Bank in Greenwich, Connecticut, in a note today.

Other Product Gains

Seventy percent of Schering-Plough's growth in the quarter came from outside the cholesterol franchise, Hassan said.

Sales for the arthritis treatment Remicade increased 34 percent to $373 million, while the allergy medicine Nasonex rose 24 percent to $284 million.

International sales of Claritin allergy prescriptions rose 11 percent to $112 million. Sales of the Clarinex allergy pill, a newer, slightly altered version of Claritin, grew 28 percent to $204 million.

The company said sales including the cholesterol pills will grow at a more moderate pace for the remainder of the year as certain products face increased competition. Spending on research is expected to continue to outpace increases in sales this year.

To contact the reporters on this story: Shannon Pettypiece in Washington at spettypiece@bloomberg.net; Catherine Larkin in Washington at clarkin4@bloomberg.net.

Last Updated: April 19, 2007 16:14 EDT