Drugmakers Merck & Co. and partner Schering-Plough Corp. both posted fourth-quarter results Tuesday that topped analysts' expectations, sending their shares up, but revenues from their crucial cholesterol franchise plunged.

Both companies beat profit expectations primarily due to aggressive cost-cutting, including eliminating thousands of jobs under ongoing restructuring programs, as the recession took a toll.

Merck actually saw revenue slump 3 percent, to $6 billion, as several key drugs had sales declines, partly because of generic competition. Schering-Plough's revenue, greatly boosted by its biggest acquisition ever, was still slightly below expectations as top-seller Remicade, for rheumatoid arthritis and other inflammatory disorders, posted higher sales at $491 million that still missed forecasts.

"The next quarter will be absolutely illuminating" for both companies as the deepening recession and more people losing health insurance further reduce health care spending, predicted analyst Steve Brozak of WBB Securities. "For the first time, we will see substantial effects of a global recession on the pharmaceutical industry."

Wall Street liked Tuesday's results, though, driving Merck shares up by $1.81, or 6.4 percent, to $30.24. Schering-Plough shares closed up $1.44, or 8.2 percent, to $18.91.

Whitehouse Station, N.J.-based Merck swung to a sizable fourth-quarter profit, after a huge year-ago loss due to a $4.85 billion charge to settle roughly 50,000 lawsuits over its painkiller Vioxx, withdrawn in 2004 because it doubled risk of heart attack and stroke. The company took a $62 million charge in the quarter for future Vioxx legal costs.

The maker of vaccines, diabetes drugs and asthma treatment Singulair reported net income of $1.64 billion, or 78 cents per share. A year ago, it lost $1.63 billion, or 75 cents a share.

Excluding 9 cents in restructuring charges, Merck would have earned 87 cents a share.

Analysts surveyed by Thomson Financial were expecting, on average, earnings per share of 74 cents and revenue of $5.98 billion.

Lower costs for materials, production and restructuring boosted the bottom line.

Revenue from the two companies' partnership on the cholesterol drugs Vytorin and Zetia — hurt by reports over the past year questioning their effectiveness and safety — fell 26 percent, to $1.1 billion.

Sales of osteoporosis treatment Fosamax plunged 60 percent to $318 million due to generic competition. Sales of blood-pressure medicines Cozaar and Hyzaar dipped 1 percent, to $881 million, and revenue for Gardasil, a vaccine to prevent cervical cancer, dropped 16 percent to $286 million.

"Gardasil continues to disappoint," Credit Suisse analyst Catherine Arnold wrote to investors, adding, "The company is facing increasing pressure to make a meaningful acquisition that can help turn around its future growth potential," with Singulair and Cozaar/Hyzaar losing patent expiration by 2012.

Chief Executive Richard T. Clark told analysts Merck just completed a 2005 program, slimming down 10 percent to 55,200 employees; 5,300 more are to go under a new restructuring announced in October.

Merck reaffirmed its 2009 financial forecasts, for earnings per share of $2.95 to $3.17, excluding up to about 20 cents' worth of one-time items, and revenue between $23.7 million and $24.2 billion.

For all of 2008, Merck reported net income of $7.8 billion, or $3.64 per share, and revenue of $23.85 billion, down 1 percent.

Kenilworth, N.J.-based Schering-Plough Corp. earned $480 million, or 27 cents per share, after losing $3.36 billion, or $2.08 per share, a year earlier because of charges including $3.8 billion for acquiring Organon Biosciences NV.

Schering's revenue rose 17 percent to $4.35 billion, including $1.3 billion in sales from Organon, but unfavorable currency exchange rates cut revenue 6 percent.

"Today's result should be viewed positively by the Street," Arnold wrote.

Overall, prescription drugs sales climbed 17 percent to $3.46 billion; animal health product sales rose 33 percent to $674 million and consumer health products fell 14 percent to $219 million — mainly as allergy drug Zyrtec, recently available without prescription, cut into sales of Schering's nonprescription Claritin.

Excluding various one-time items, the company earned 39 cents per share.

Analysts expected profit of 30 cents per share on revenue of $4.51 billion.

For the full year, Schering earned $1.65 billion, or $1.01 per share, on sales of $18.5 billion, up 46 percent.

Schering since April has been working on cutting 20 percent of its sales staff and 10 percent of its overall workforce, but unlike most competitors does not face major losses to generic competition.