Generic competition, charges cut Merck Q4 profit (Update)

February 1, 2013 by Linda A. Johnson

Merck & Co.'s fourth-quarter profit fell 7 percent because of hits from generic competition and one-time charges, and the company pushed back plans to seek approval of a key experimental osteoporosis drug.

The quarterly results beat Wall Street expectations, but Merck shares fell in premarket trading Friday as investors learned Merck is reviewing safety and efficacy data from a crucial late-stage patient test of odanacatib.

During a morning conference call with analysts, Merck said that instead of applying for approval of odanacatib in the first half of this year, it won't do so until 2014. That will allow Merck time to finish an extension of an odanacatib study that includes about 8,200 women, so that Merck can also submit those longer-term results to regulators—apparently a strategy to improve chances the drug will be approved.

In early trading, Merck shares fell $1.42, or 3.3 percent, to $41.83.

The world's third-biggest drugmaker by revenue said net income was $1.4 billion, or 46 cents per share, down from $1.51 billion, or 49 cents per share, a year earlier.

Excluding one-time restructuring and acquisition charges totaling $1.14 billion, net income was $2.54 billion, or 83 cents per share, 2 cents more than analysts polled by research provider FactSet were expecting.

The maker of Januvia and other diabetes pills says revenue totaled $11.74 billion, down 5 percent from 2011's fourth quarter. Analysts expected $11.47 billion.

The sales drop was due to generic competition for asthma and allergy drug Singulair, which had brought Merck about $5.5 billion in annual sales until its U.S. patent expired in August, as well as for blood pressure medicines Cozaar and Hyzaar.

"Merck did have a very strong fourth quarter and a good year overall," CEO Kenneth Frazier told the analysts.

He said that despite the generic competition, the company expected to keep revenue this year at about the same level as last year's $47.27 billion.

Analysts on the conference call repeatedly asked exactly why Merck was changing its plans for odanacatib, and whether the data showed a serious risk that could block approval of the drug, which is viewed as a potential blockbuster. Company executives declined to give details.

"We continue to believe in the potential of this drug to meet the unmet needs of people with osteoporosis," CEO Kenneth Frazier told the analysts.

He noted that most women with osteoporosis aren't being treated with medication, and about a quarter of patients find they can't tolerate side effects of osteoporosis drugs in an older class called bisphosphonates, including heartburn, nausea, diarrhea and joint pain and swelling. Merck's Fosamax, which has had generic competition for four years, was the first drug in that class and had been the top seller.

Along with the weak global economy and government health programs in many countries trying to rein in spending, Merck has been hurt by generic rivals to what had been its top seller. Singulair, which treats asthma and allergies, lost patent protection in the U.S. in early August. In the last quarter, its global sales nosedived 67 percent to $480 million.

That pulled down total prescription drug sales by 6 percent, to $10.09 billion. Most of Merck's other big drugs produced higher sales, led by the Januvia Type 2 diabetes drug, up 18 percent to $1.13 billion, and Janumet, a diabetes combo pill, up 17 percent to $452 million.

Cholesterol-lowering drug Zetia posted a 6 percent increase in sales to $676 million, and sales jumped 61 percent to $442 million for Gardasil a vaccine against sexually transmitted cancers.

Merck's smaller divisions saw increased sales, however. Veterinary medicine sales edged up 3 percent to $898 billion. Sales of consumer health products such as Dr. Scholl's foot care products climbed 9 percent to $395 million.

Merck, based in New Jersey, forecast 2013 earnings per share of $3.60 to $3.70, excluding charges. Analysts were expecting $3.68 per share.

For the full year, Merck reported net income of $6.66 billion, or $2.16 per share, up from $6.27 billion, or $2.02 per share. But sales in 2012 dipped nearly 2 percent, to $47.27 billion.

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


Related Stories

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

July 27, 2012
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 ...

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.

Amgen 4Q profit drops 16 pct. on higher spending

January 23, 2013
Drugmaker Amgen Inc. on Wednesday posted a 16 percent drop in fourth-quarter profit, as higher costs for production, marketing, research and other items offset higher sales for many of its biologic medicines. The results ...

Recommended for you

Drug therapy from lethal bacteria could reduce kidney transplant rejection

August 3, 2017
An experimental treatment derived from a potentially deadly microorganism may provide lifesaving help for kidney transplant patients, according to an international study led by investigators at Cedars-Sinai.

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 ...


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.