Merck posts strong first-quarter profit, but revenue light

May 1, 2018 by Linda A. Johnson
Merck posts strong first-quarter profit, but revenue light
In this Dec. 18, 2014, file photo, a person walks through a Merck company building, in Kenilworth, N.J. Merck & Co. reports earnings Tuesday, May 1, 2018. (AP Photo/Mel Evans, File)

Drugmaker Merck's first-quarter revenue rose 6 percent, driven by a huge jump in sales of cancer blockbuster Keytruda, but a $1.4 billion charge for starting a research partnership with Japanese drugmaker Eisai dragged down profits by more than half.

Despite that deal, analysts on a call to discuss Merck's results Tuesday peppered company executives about plans for major acquisitions or other strategies to diversify, given that Keytruda now accounts for about 15 percent of total revenue.

Merck already has approvals for treating seven tumor types with Keytruda, which has grabbed the lead in the white-hot field of immuno-oncology, or cancer drugs that work by removing a sort-of invisibility cloak so immune system cells can better spot and attack cancerous cells. U.S. regulatory approvals are pending for additional uses, and recent study data show that Keytruda plus chemotherapy cut risk of death in half compared with just chemotherapy in advanced lung cancer. Meanwhile, the company is running about 750 studies of Keytruda alone or in combination with other drugs.

Merck executives said they have plenty of money to do a deal of any size, with about $20 billion of cash on hand and room to borrow more, but they're not necessarily looking for a mega-deal. They also stressed that Merck's animal health business, which analysts have been pressing it to divest, provides both diversification and synergies with research in the human health division.

"I am very optimistic about our near and long-term growth trajectory," Chief Executive Ken Frazier told the analysts.

The maker of vaccines and diabetes drug Januvia reported net income of $736 million, or 27 cents per share, down 53 percent from $1.55 billion, or 56 cents per share, a year earlier. Earnings, adjusted for one-time costs, came to $1.05 per share, 6 cents better than Wall Street analysts had projected.

Total revenue of $10.04 billion just missed the $10.12 billion analysts expected.

"This was a solid quarter for Merck," Edward Jones analyst Ashtyn Evans wrote to investors. "We think growth from Keytruda will help counter declining sales from competitive pressures in areas such as diabetes and hepatitis C."

The diabetes category has become so crowded that drugmakers are forced to give huge discounts to insurers, while Merck's Zepatier was a late comer to the hepatitis C category. It never got much traction against early entries such as Gilead's Harvoni and saw sales drop 65 percent in the quarter, to just $131 million.

Prescription drug sales rose 4 percent to $8.92 billion, and veterinary medicine sales jumped 13 percent to $1.07 billion in the quarter.

Total U.S. sales dipped 1 percent to $4.13 billion, while sales overseas rose 13 percent, buoyed by favorable currency exchange rates, to $5.9 billion.

The Kenilworth, New Jersey, company raised its 2018 financial forecast a bit. It now expects adjusted full-year earnings between $4.16 and $4.28 per share, with revenue between $41.8 billion and $43 billion.

In midday trading, shares fell $1.63, or 2.8 percent, to $57.24.

Explore further: Pfizer's Q1 net jumps 14 pct., sales just miss expectations

Related Stories

Pfizer's Q1 net jumps 14 pct., sales just miss expectations

May 1, 2018
Pfizer posted slightly higher sales and a 14 percent jump in profit in the first quarter, thanks to lower restructuring costs and a much-lower tax rate, but its revenue still missed Wall Street expectations.

Merck breezes past 3Q profit expectations, raises forecast

October 25, 2016
Higher sales of vaccines and prescription medicines, coupled with restrained spending, helped Merck & Co. post a 20 percent jump in third-quarter profit, trouncing Wall Street expectations.

Generic competition cuts Merck's Q1 sales, profit

May 1, 2013
Drugmaker Merck & Co. is reporting lower first-quarter results and cutting its 2013 profit forecast by 15 cents a share. It also is announcing a huge share buyback, up to $15 billion worth of its stock.

Merck cost cuts offset lower sales and strong dollar in 3Q

October 27, 2015
Merck's third-quarter profit more than doubled as heavy cost-cutting more than offset lower sales and the negative effects of a strong dollar.

Merck beats 1Q profit views with tight cost controls

May 5, 2016
Merck posted an 18 percent jump in first-quarter income, beating Wall Street expectations, as reduced spending on marketing, administration and research easily offset lower medicine sales outside the U.S.

Drugmaker Merck posts spike in 4Q profit, beats forecasts

February 4, 2015
Drugmaker Merck & Co.'s fourth-quarter profit skyrocketed to $7.32 billion, skewed by an $11.2 billion gain from selling its consumer health business to Germany's Bayer AG.

Recommended for you

Tongue-in-cheek Nobels honor nutritional analysis of cannibalism, roller-coaster kidney stones treatment

September 14, 2018
A nutritional analysis of cannibalism and treating kidney stones on roller-coasters were research projects honored by tongue-in-cheek awards at Harvard University Thursday, designed to make you laugh first, and think later.

Pediatric robot patient offers new level of realism for doctors in training

September 10, 2018
A team of researchers and engineers at Gaumard Scientific has unveiled a new robot that raises the bar on medical training devices. The robot, called HAL, has been made to look like a five-year-old male patient and offers ...

Why men say they've had more lifetime sexual partners than women

July 25, 2018
The disparity between the number of sexual partners reported by men and women can largely be explained by a tendency among men to report extreme numbers of partners, and to estimate rather than count their lifetime total, ...

Censors jump into action as China's latest vaccine scandal ignites

July 22, 2018
Chinese censors on Sunday deleted articles and postings about the vaccine industry as an online outcry over the country's latest vaccine scandal intensified.

Revenge of a forgotten medical 'genius'

June 30, 2018
It's not an uncommon fate for a pioneering scientist: languishing unrecognised in his time before dying in obscurity. But as his 200th birthday approaches, the life-saving work of a Hungarian obstetrician is finally getting ...

Yes, you can put too much chlorine in a pool

June 2, 2018
(HealthDay)—Before you take a dip in the pool this summer, be sure there's not too much chlorine in the water.

0 comments

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.