Merck profit falls, beats forecast

Merck profit falls, beats forecast
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First Published: Tue, Jul 21 2009. 06 47 PM IST
Updated: Tue, Jul 21 2009. 06 47 PM IST
New York: Merck & Co said second-quarter earnings fell, hurt by lower sales of its cholesterol drugs, but income from partnerships and a rebound in sales of asthma drug Singulair helped the drugmaker beat profit forecasts.
Merck, whose shares rose 3.8% in premarket trading on Tuesday, earned $1.59 billion, or 74 cents per share. That compares with $1.77 billion, or 82 cents per share, in the year-earlier period.
Merck, which plans to acquire Schering-Plough Corp in coming months, said it earned 83 cents per share, excluding special items. Analysts on average expected 77 cents, according to Reuters Estimates.
Revenue fell 3% to $5.90 billion but came in $70 million above the Reuters Estimate forecast. Sales would have risen 3% if not for the strong dollar, which undermines the value of overseas sales.
Sanford Bernstein analyst Tim Anderson said Merck’s equity income of $587 million from joint ventures, including its cholesterol partnership with Schering-Plough, was 15% higher than his forecast and helped drive the earnings beat.
Results were helped by a 10% decline in marketing and administrative expenses. Moreover, the drugmaker’s effective tax rate, excluding special charges and merger-related costs, was 20.4%, a benefit of about 5 percentage points due to favorable tax settlements.
A bright spot in the earnings report was Singulair, Merck’s asthma drug whose sales have steadily declined in the past year due to safety concerns. Its quarterly sales jumped 16% to $1.3 billion.
Sales of Januvia, a relatively new diabetes treatment, rose 38% to $462 million.
But combined sales of cholesterol fighters Zetia and Vytorin, sold in partnership with Schering-Plough, fell 10% to $1 billion. The drugs have lost favor with many doctors following a pair of clinical trials that cast doubt on their effectiveness.
Results were also hampered by Gardasil, Merck’s vaccine against the virus that causes cervical cancer. Gardasil sales fell 18% to $268 million hurt by rival vaccine made by GlaxoSmithKline Plc.
Merck stuck with its full-year 2009 profit forecast of $3.15 to $3.30 per share excluding special items, and its full-year revenue forecast of $23.2 billion to $23.7 billion.
The company expects its acquisition of Schering-Plough to close in the fourth quarter.
Merck shares were up $1.06 at $29.00.
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First Published: Tue, Jul 21 2009. 06 47 PM IST