Wednesday, December 17th-0.3°C
24124
22934

Drugmaker Merck's 1Q profit up 7 pct. as costs cuts offset sales drop from generic competition

WHITEHOUSE STATION, N.J. - Major cost cuts enabled drugmaker Merck & Co. to offset lower first-quarter sales as generic competition continues to hurt sales of former blockbuster medicines. Merck's profit rose 7 per cent, trouncing Wall Street expectations.

Merck said it plans to rely on its pipeline of experimental drugs for future sales. That would make it an exception to the trend among many other drugmakers, which are pursuing big acquisitions to keep sales growing.

The maker of the diabetes pill Januvia said Tuesday that net income was $1.71 billion, or 57 cents per share, up from $1.59 billion, or 52 cents per share, a year earlier.

Excluding $896 million in restructuring and acquisition charges, net income was $2.6 billion, or 88 cents per share — 9 cents better than analysts expected.

In mid-afternoon trading, Merck's shares rose $1.71, or 3 per cent, to $58.40.

Revenue totalled $10.26 billion, down 4 per cent and just below the $10.44 billion analysts expected.

Pharmaceutical sales dropped 5 per cent, to $8.45 billion, as cheaper generic copycat pills hammered several off-patent drugs that once brought in billions each year: asthma and allergy pill Singulair, allergy spray Nasonex and blood pressure drugs Cozaar and Hyzaar.

Merck's top sellers, Type 2 diabetes pills Januvia and Janumet, brought in a combined $1.33 billion, up 3 per cent. Sales jumped 10 per cent to $604 million for immune disorder drug Remicade, and also rose for HIV drug Isentress and several other products.

Lower sales of nonprescription Claritin allergy pills dragged down consumer health sales 4 per cent to $454 million. Sales of veterinary medicines declined 3 per cent to $813 million.

Analysts were surprised by the level of cost cuts: 8 per cent for administration and marketing expenses and 17 per cent for research spending as new research head Roger Perlmutter continues to cut Merck's least-promising programs. Merck, based in Whitehouse Station, N.J., reduced its global workforce by 2,000 in the quarter, to 74,000.

"It is a necessary but not sufficient part of their execution strategy," Edward Jones analyst Judson Clark said of the cuts. He said Merck also must get key drugs in its pipeline approved to do well.

CEO Kenneth Frazier told analysts during a conference call that Merck has promising experimental drugs in testing for hepatitis C, HIV and various cancers.

"We're excited by our pipeline and what's to come," he said.

Meanwhile, Merck's two tablets for gradually reducing seasonal allergies to grass and ragweed were recently approved. Because patients must start the daily immunotherapy tablets a few months before allergy season begins, Merck said it's now promoting Ragwitek to doctors but it's too late to promote Grasstek this year.

With the recent spurt of proposed acquisitions and asset swaps in the pharmaceutical industry, analysts asked if Merck would do such a deal. Frazier said small deals might be possible, but he's focused on growth through new drugs for unmet medical needs.

"Our preferred (growth) route is through innovation rather than consolidation," he said.

Merck reaffirmed its 2014 forecast for profit of $2.15 to $2.47 per share, prompting analysts to ask why it didn't raise its forecast. Merck said that's because Venezuela may devalue its currency, which would decrease the value of sales there.

"Anytime you see a nine-cent beat, you'd like to see guidance walk up," so Merck may expect a slightly softer second quarter, Clark said.

___

Follow Linda A. Johnson at www.twitter.com/LindaJ_onPharma

The Canadian Press


Read more Business News

23981


Recent Trending




Today's Market
S&P TSX14213.88+352.36
S&P CDNX659.00+16.65
DJIA17356.87288.00
Nasdaq4644.312+96.477
S&P 5002012.89+40.15
CDN Dollar0.8594+0.0007
Gold1199.50+5.20
Oil56.55+0.08
Lumber337.20+3.00
Natural Gas3.706+0.004

 
Okanagan Companies
Pacific Safety0.125+0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.27+0.04
Cantex0.03-0.005
Anavex Life Sciences0.1659-0.0241
Metalex Ventures0.05-0.005
Russel Metals27.18+1.03
Copper Mountain Mining1.54+0.11
Colorado Resources0.105-0.005
ReliaBrand Inc0.0199+0.0065
Sunrise Resources Ltd0.055+0.005
Mission Ready Services0.22+0.02

 
23744


24380

FEATURED Property
2097664949 Monashee Place
3 bedrooms 3 baths
$559,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Managing your sales team

Managing a sales team can be quite a challenge. Harnessing individual personality preferences and getting everyone focused on the same goals, moving at the same pace, and working in collaboration to d...


Working under the table

They say there are only two things that are certain in life: death and taxes. Not exactly an uplifting thought, but true nonetheless. Some people try to avoid paying tax by “working under the ta...


Housing prices to skyrocket?

As most of you know, this column was started with a focus on Okanagan real estate. Over time, more and more columnists started covering the real estate sphere and so it morphed in to a personal colum...

_



24437

24437


Member of BC Press Council


23546