Merck & Co posted an 11% rise in first-quarter profits yesterday, with stringent cost-cutting measures and a good performance by drugs for lowering cholesterol and treating asthma countering the continuing loss of sales from withdrawn painkiller Vioxx.
Net income came in at $1.52 billion, although revenues rose less than 1% to $5.41 billion. The bottom line was boosted by savings afforded by the elimination of 1,800 jobs in the first quarter that put Merck on track to reach its target of 7,000 staff cuts by 2008, as well as restructuring costs that allowed the company to reduce its tax burden.
The company’s top product, cholesterol-lowerer Zocor (simvastatin) put in a sterling performance in the USA with a sales hike of 13% to $833 million, although this is likely to be something of a last gasp for the product as it is due to lose exclusivity there in June. Worldwide sales of the drug fell 4% to $1.06 billion on the back of generic competition outside the USA.
Sales of the oral asthma drug Singulair (montelukast) rose 9% to $801 million, and Merck forecast turnover of the product will rise at least 11% this year to $3.3 billion to $3.6 billion, elevating it to the top spot in Merck’s portfolio.
Global sales of Zetia (ezetimibe) and the combination product Vytorin (ezetimibe and simvastatin), for which Merck splits profits with partner Schering-Plough, reached $793 million.
High blood pressure treatments Cozaar (losartan) and Hyzaar (losartan and hydrochlorothiazide) slipped 2% to $701 million, while osteoporosis drug Fosamax (alendronate) fell by the same margin to $754 million.
Overall, analysts said that Merck seems to be exerting tight control over the business at a difficult time, with the loss of $2.5 billion in annual revenue from Vioxx sales and the threat of significant damages from individuals who are claiming injury from the drug, taken off the market in 2004 after it was linked to an elevated risk of heart attack and stroke.
Merck said it is now facing 11,500 Vioxx lawsuits, and reiterated its vow to fight every one individually. Earlier this month, a New Jersey jury awarded a Vioxx user and his wife $13.5 million in compensatory and punitive damages, and last year a jury in Texas awarded the widow of a Vioxx user $253 million, subsequently capped at $26 million.
Merck has said it plans to appeal both verdicts, and so far has set aside a fighting fund of $685 million to fight its corner. The drugmaker sad it had no plans at present to add to that kitty.