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Drugmaker Merck posts 12 percent drop in 2Q profit
2009-07-21
TRENTON, N.J. - Drugmaker Merck & Co. on Tuesday posted a 12 percent drop in second-quarter profit, due to lower sales of its cholesterol drugs and several vaccines, but still beat Wall Street's conservative expectations. The maker of asthma and allergy treatment Singulair and cervical cancer vaccine Gardasil said its net income was $1.56 billion, or 74 cents per share. A year earlier, net income was $1.77 billion, or 82 cents per share. The company said it had restructuring charges and expenses related to its acquisition of Schering-Plough Corp. that totaled 9 cents per share. Excluding those one-time charges, earnings per share would have been 83 cents. Merck said the strong dollar also was a factor, lowering revenue abound 6 percentage points to $5.9 billion. That was down from $6.05 billion in the second quarter of 2008. Analysts polled by Thomson Reuters were expecting earnings per share of 77 cents and revenue of $5.84 billion. The company said it still expects earnings per share this year of $2.84 to $3.09, or $3.15 to $3.30 excluding one-time items. That forecast includes pretax charges of roughly $500 million for restructuring and $300 million of costs related to the Schering-Plough deal. Merck said its plan to acquire Schering-Plough, for $41.1 billion, is progressing as planned and on track to close in the fourth quarter. The two companies already jointly sell the cholesterol drugs Vytorin and Zetia, both of which have seen sales steadily decline since January 2008, when concerns about their effectiveness and safety first surfaced. The drugs' combined sales dropped 10 percent in the quarter, to $1 billion. Merck's top seller, Singulair, saw sales jump 16 percent to $1.3 billion. Two newer products, Januvia for type 2 diabetes and HIV drug Isentress, saw sales rise as well, to $462 million and $172 million, respectively. Most other products, though, posted sales declines, including Gardasil, which has seen sales slide now that many adolescent girls have been inoculated, and two other vaccines, Rotateq for rotavirus and Zostavax for shingles. For the first six months, net income was down 41 percent at $2.98 billion, or $1.41 per share. In the first half of 2008, net income totaled $5.07 billion, or $2.34 per share. The first half of this year included a total of 16 cents worth of charges for restructuring and merger expenses.
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