Merck & Co said yesterday that it was anticipating its first quarter financial results would be higher than expected due to a “number if factors”, including cost cuts [[15/12/04a]], favourable currency rates and an improved revenue performance. However, the company tempered the good news with a reiteration that it was still expecting full-year 2005 earnings per share in the $2.42 to $2.52 range – as much as 7% down on the figure recorded in 2004 [[26/01/05b]] – in the wake of the market withdrawal of its arthritis and acute pain drug, Vioxx (rofecoxib) [[01/10/04a]].
Merck is now expecting first quarter EPS of $0.62 – versus an average analyst estimate of $0.56 per share. The company recorded EPS of $0.73 in the corresponding quarter of 2004 [[23/04/04d]].
Importantly, the company notes that its financial guidance does to reflect the establishment of any reserves for any potential liability relating to the Vioxx litigation. The drug was pulled from the market late in September last year after clinical trial data linked it to a more than doubling in the risk of suffering a heart attack versus placebo. The company’s share price has since slumped amid earnings revisions and a barrage of lawsuits filed by former users of the product. As of the end of January, it had been named in 850 lawsuits, including approximately 2,425 plaintiff groups alleging personal injuries resulting from the use of Vioxx [[14/03/05c]].
Merck will report its actual first quarter earnings on Thursday, April 21.