Merck's 2Q net falls on charges, but sales rise

July 27, 2012 by LINDA A. JOHNSON
This Tuesday, July 17, 2012, photo shows the exterior of the Merck offices in Palo Alto, Calif. Merck & Co. reported Friday July 27, 2012 that its second-quarter net income fell 11.4 percent as slightly higher sales were offset by acquisition and restructuring costs, but the drugmaker beat Wall Street expectations. (AP Photo/Paul Sakuma)

Merck & Co.'s second-quarter net income fell 11.4 percent as slightly higher sales were offset by acquisition and restructuring costs. However, the drugmaker beat Wall Street expectations, and Merck shares jumped in early trading.

The maker of diabetes pill Januvia and asthma and allergy medicine Singulair said Friday that its net income was $1.79 billion, or 58 cents per share, down from $2.02 billion, or 65 cents per share, a year earlier. The year-earlier quarter was boosted by a one-time gain of about $700 million from a favorable settlement of a tax audit.

Excluding one-time items, net income was $3.23 billion, or $1.05 per share, up from $2.95 billion, or 95 cents per share, in 2011's second quarter. That beat analysts' expectations of earnings per share of $1.01. Charges included $1.42 bilion for acquisition-related costs including writedowns for the decreased value of acquired assets, and $289 million in costs for ongoing restructuring.

Revenue rose 1.3 percent to $12.31 billion, exceeding expectations of $12.15 billion. Merck noted that unfavorable currency exchange rates, mainly due to the weak euro, reduced total revenue by 4 percent.

Pharmaceutical sales rose 2 percent, to $10.56 billion.

"This was our sixth straight quarter of top-line growth and bottom-line growth," CEO Kenneth Frazier told analysts during a conference call.

Sales were led by Singulair, up 6 percent to $1.43 billion in its last quarter before generic competition arrives on Aug. 3 and starts to cut sales. Sales of Januvia and combo pill Janumet both jumped about 30 percent, to $1.06 billion and $411 million, respectively.

Merck said it expects multiple generic versions of Singulair to hit drugstores next Friday and anticipates 90 percent of sales will be lost to generic pills within two months.

Merck noted it still expects revenue for the year to come in at about the same level as in 2011, when it reported $48.04 billion in sales. That's despite that huge hit to Singulair, the impact of unfavorable exchange rates and ongoing austerity measures in Europe, where government health programs continue to push for slight price decreases each year.

Sales of veterinary medicines climbed 8 percent to $865 million, and sales of consumer health products such as the Coppertone sun care line edged up 2 percent to $552 million.

Merck reiterated its 2012 forecast for profit of $2.04 to $2.30, or $3.75 to $3.85 per share excluding charges.

Shares of Merck rose $1.25, or 2.9 percent, to $44.58.

Explore further: Qualcomm 3Q results beat Wall Street estimates


Related Stories

Qualcomm 3Q results beat Wall Street estimates

July 20, 2011
(AP) -- Wireless chip-maker Qualcomm Inc.'s results for the latest quarter beat Wall Street's expectations, and its projections for the current quarter are also above analysts' estimates.

Cisco beats estimates with 2Q earnings, sales (Update)

February 8, 2012
(AP) -- Cisco, the world's largest maker of computer networking equipment, on Wednesday said that its net income jumped 44 percent in the latest quarter as it continues to put last year's slump behind it.

Recommended for you

Exploring the potential of human echolocation

June 25, 2017
People who are visually impaired will often use a cane to feel out their surroundings. With training and practice, people can learn to use the pitch, loudness and timbre of echoes from the cane or other sounds to navigate ...

Team eradicates hepatitis C in 10 patients following lifesaving transplants from infected donors

April 30, 2017
Ten patients at Penn Medicine have been cured of the Hepatitis C virus (HCV) following lifesaving kidney transplants from deceased donors who were infected with the disease. The findings point to new strategies for increasing ...

'bench to bedside to bench': Scientists call for closer basic-clinical collaborations

March 24, 2017
In the era of genome sequencing, it's time to update the old "bench-to-bedside" shorthand for how basic research discoveries inform clinical practice, researchers from The Jackson Laboratory (JAX), National Human Genome Research ...

The ethics of tracking athletes' biometric data

January 18, 2017
(Medical Xpress)—Whether it is a FitBit or a heart rate monitor, biometric technologies have become household devices. Professional sports leagues use some of the most technologically advanced biodata tracking systems to ...

Financial ties between researchers and drug industry linked to positive trial results

January 18, 2017
Financial ties between researchers and companies that make the drugs they are studying are independently associated with positive trial results, suggesting bias in the evidence base, concludes a study published by The BMJ ...

Best of Last Year – The top Medical Xpress articles of 2016

December 23, 2016
(Medical Xpress)—It was a big year for research involving overall health issues, starting with a team led by researchers at the UNC School of Medicine and the National Institutes of Health who unearthed more evidence that ...


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.