Thursday, October 30th6.4°C
23696
23823

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

23028


Recent Trending




Today's Market
S&P TSX14462.26-65.311
S&P CDNX772.10-8.97
DJIA17114.48140.17
Nasdaq4541.482-7.744
S&P 5001986.00+3.70
CDN Dollar0.8932-0.0009
Gold1197.40-27.50
Oil80.83-1.13
Lumber322.00+0.40
Natural Gas3.715+0.066

 
Okanagan Companies
Pacific Safety0.12+0.02
Knighthawk0.01-0.005
QHR Technologies Inc1.13-0.02
Cantex0.045-0.015
Anavex Life Sciences0.17-0.01
Metalex Ventures0.03-0.005
Russel Metals32.36-0.21
Copper Mountain Mining1.97-0.05
Colorado Resources0.13-0.005
ReliaBrand Inc0.012-0.004
Sunrise Resources Ltd0.025+0.005
Mission Ready Services0.35-0.02

 



23028

FEATURED Property
20978731145 Tataryn Rd
3 bedrooms 2 baths
$399,999
more details
image2image2
Click here to feature your property
Please wait... loading


Empty nesting: financial issues

Now that the children have ‘left the nest’, it is a good time to step back and take stock of your financial situation. Being on your own will probably cut household costs to some extent, b...


Keep your haunted home safe

Eerie sounds, spooky lights and Jack-o’-lanterns aglow—extra efforts at Halloween will keep visitors coming back for both tricks and treats. However, to keep the fun going, it’s imp...


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...

_








Member of BC Press Council


23091