The drugmaker Merck & Co.’s long-term sales and earnings growth is unsustainable without more business development to supplement its pipeline, according to a Citi analyst.

The world’s third-largest drugmaker said Thursday during an investor meeting that it has revamped research operations to make them more productive and started a new business strategy to increase revenue and profit. Merck has had five new drugs approved this year and said it has eight new products for which it will seek U.S. approval next year or in 2013.

The company has been hurt by competition from generic versions of blockbuster osteoporosis, blood pressure and cholesterol drugs. Next year, U.S. generic competition hits current top seller, the $5 billion-a-year allergy and asthma drug Singulair.

The company’s new business strategy includes growing medicine sales in emerging and other key markets, expanding its consumer and animal health businesses, launching new drugs and boosting sales of existing ones, and managing spending tightly. The drugmaker also has trimmed the number of diseases for which it does research.

Merck also raised its dividend for the first time since 2004.

Analyst John T. Boris said in a research note that the briefing at Merck’s Whitehouse Station, N.J., headquarters “served to heighten our concerns over its next wave of innovation.”

He said the company’s development pipeline is lagging behind its peers, and Merck BioVentures, which focuses on biologic drugs, will not meet a development target by next year. The analyst expects lower sales from it.

He also said more reductions in its employee headcount are needed to fuel earnings growth but did not elaborate.

Boris lowered his sales and earnings estimates for the company from 2014 to 2020.

A message seeking comment from Merck was left before business hours but was not immediately returned.

Date: November 11, 2011
Source: Associated Press