Strong performances from products old and new have helped Merck & Co post a 12% rise in revenues for the third quarter to $6.1 billion, while earnings leapt 62%.
Net income was $1.53 billion, or $0.75 per share, and that included a charges of $325 million related to the purchase of NovaCardia and $70 million reserved for defence costs related to Vioxx (rofecoxib) lawsuits, though the like, year-earlier quarter did include a $598 million charge related to Vioxx.
As for sales, the most striking growth came from Gardasil. The cervical cancer jab headed the strong performance of Merck’s vaccines unit, contributing $418 million to the division’s $1.2 billion, which represented a rise of 116%. sales for the three-month period, which itself put in a three-fold increase over last year.
Other big earners were the asthma drug Singulair (montelukast), the number one prescribed respiratory drug in the USA, which added $1.0 billion to the firm’s coffers (up 17%), while its cholesterol-lowering franchise headed by Vytorin (ezetimibe plus simvastatin) and Zetia (ezetimibe) soared. Zetia sales reached $607 million, an increase of 21%, and Vytorin rose 32% to $693 million. Both drugs, which are co-marketed with Schering-Plough, achieved all-time highs in terms of total prescription share during the third quarter.
New drugs are also on the up, with Januvia (sitagliptin) generating $185 million for the quarter, while Janumet (sitagliptin plus metformin) brought in $19 million. On the downside, sales of the osteoporosis drug Fosamax (alendronate) fell 6% to $725 million, while revenues from the anti-hypertensives, Cozaar (losartan) and Hyzaar (losartan plus hydrochlorothiazide), were flat at $814 million.
Analysts were impressed with the results and Bank of America's Chris Schott issued a note saying that "we see Merck shares poised for further upside based on continued sales momentum, particularly as Gardasil and Januvia become more significant contributors”. He added that the firm’s focus on “differentiated new mechanisms of action well positions the company to weather the current difficult [regulatory] environment”.
There is some concern about the generic competition that Fosamax, Cozaar/Hyzaar and Singulair are facing in the next five years but Mr Schott said that the successful way Merck has handled the loss of revenues from the cholesterol-lowering drug, Zocor (simvastatin) “eases our concerns on this front."
One potential problem remains the costs associated with potential defeats in Vioxx lawsuits. The US giant still faces 26,600 suits and has not established any reserves for any potential liability. Despite this slight cloud hanging over the results, Merck upped its full-year earnings per share guidance to $3.08-$3.14, compared to a previous range of $3.00-$3.10.
Away from the results, Merck noted that it is trying once again to get over-the-counter approval of its old cholesterol-lowering product Mevacor (lovastatin).
The firm said it has been advised that a New Drug Application for an OTC version of Mevacor 20mg taken once-daily will be reviewed by the FDA on December 13. This comes after a similar application made in January 2005 with then-partner Johnson & Johnson was rejected by the agency which was worried about patients who would not be able to make appropriate assessments about whether they require a cholesterol-lowering drug.
This followed another unsuccessful bid in 2000 to sell an OTC 10mg version of Mevacor. This time, however, Merck is submitting additional data and is hopeful of getting an approval.