TRENTON, New Jersey (AP) – Merck & Co. said its first-quarter profit more than tripled as strong sales of key drugs and lower costs from integrating its Schering-Plough acquisition offset sales lost to competition from generic versions of its drugs.
The results beat Wall Street expectations. Merck’s stock rose 61 cents in premarket trading to $36.38.
The maker of Singulair for asthma and allergies and Januvia for diabetes says net income was $1.04 billion, or 34 cents per share, up from $299 million, or 9 cents a share, in 2010’s first quarter.
Revenue edged up 1 percent to $11.58 billion. That includes several billion dollars from products acquired when Merck bought Schering-Plough Corp. in November 2009 for $49 billion.
Excluding numerous one-time items, net income was $2.86 billion, or 92 cents per share.
Analysts forecast earnings per share of 84 cents and revenue of $11.38 billion. Analysts typically exclude one-time items in their estimates.
The $1.82 billion in net charges included $1.58 billion in merger-related writedowns on the value of assets and research, $126 million in restructuring costs and a $500 million payment to settle arbitration with Johnson & Johnson over rights to two drugs. A year ago, Merck had charges totaling $2.31 billion.
Merck, based in Whitehouse Station, New Jersey, raised the bottom end of its 2011 adjusted profit forecast by 2 cents, predicting $3.66 to $3.76 per share. Including charges, it expects $2.04 to $2.39 per share this year.
“We’re very much committed to growth and we think we’re off to a terrific start in the first quarter,” Chief Executive Kenneth Frazier told analysts during a conference call. “The steps we are taking are paying off.”
Merck shares rose 7 cents to $35.84 in early trading.
Frazier noted the company got double-digit sales growth from key products, “combined with deliberate cost control measures across all areas of the company as we continue to create a more effective and efficient operating model.”
Production costs were down 22 percent at $4.06 billion, partly because Merck has sold some of the two companies’ factories.
Sales were driven by strong performance from Singulair and Januvia, plus some drugs acquired with Schering: allergy spray Nasonex and Remicade for immune disorders. Their growth was partly offset by lower sales of former blockbuster heart drugs Cozaar and Hyzaar, which got generic competition last year.
Januvia and Janumet, a pill that combines Januvia with generic diabetes drug metformin, had combined quarterly sales that topped $1 billion for the first time, up 47 percent from a year earlier. Singulair revenue grew 14 percent to $1.3 billion.
Total pharmaceutical revenue rose 2 percent to $9.82 billion. Two divisions Merck acquired with Schering, animal health and consumer health, also performed well. Animal health had revenue of $758 million, up 7 percent, while consumer health hit $517 million, up 6 percent, on strong sales of Claritin allergy pills and Coppertone sun care products.
Merck noted it got U.S. approval two weeks ago for Sylatron, the first additional, or adjuvant, therapy for the deadly skin cancer melanoma approved in this country in 15 years. It’s for use soon after tumor-removal surgery in patients whose melanoma has only spread to nearby lymph nodes.
The company says it has five experimental drugs under review by regulators in the U.S. and European Union. Those are Victrelis for hepatitis C, an extended-release form of Janumet, a pill combining Januvia with Merck’s now-generic cholesterol drug Zocor, a new oral contraceptive called Nomac-E2 and an eye drug.
Date: April 29, 2011
Source: Associated Press