As had been widely expected, US behemoth, Merck & Co, reported a dramatic drop in fourth quarter net income – down 21% to $1.1 billion dollars – versus the same period in 2003 [[28/01/04b]], [[09/12/04c]], as last year’s withdrawal of the pain killer, Vioxx (rofecoxib), took its toll on financials [[01/10/04a]]. The results were negatively affected by as much as $750 million in foregone Vioxx sales, as well as a weighty $604 million addition to future legal defense costs during the quarter.
And the company’s woes at the hands of Vioxx look set to continue well into the future. At the end of 2004, Merck says that it had been named as defendant in around 575 lawsuits, including some 1,400 plaintiff groups alleging personal injury as a result of using Vioxx. In addition, 14 shareholder lawsuits have so far been filed, accusing the firm of making false and misleading statements regarding Vioxx. Further lawsuits are expected to follow, with the first suit looking set to go to trial in the first half of 2005. The firm says it will “vigorously defend” itself against the suits and notes that it has established a reserve of some $675 million solely for its future legal defense costs related to the Vioxx suits and governmental probes [[09/11/04a]]. The company has not established any reserves for any potential liability relating to the litigation.
Sales of $5.7 billion recorded during the quarter were up 2% on the corresponding quarter of 2003, and included $731 million from the asthma treatment, Singulair (montelukast) – up 44% – and $831 million from the osteoporosis therapy, Fosamax (alendronate), which was 28% higher than the previous year. The anti-hypertensives, Cozaar (losartan) and Hyzaar (losartan plus hydrochlorothiazide), reached $764 million during the three-month period – an 11% rise – and the cholesterol-lowerer, Zocor (simvastatin), rose 8% to $1.3 billion. Arcoxia (etoricoxib) – the company’s new COX-2 offering – reached $77 million during the period in question. The product is not yet available in the USA and will face US Food and Drug Administration scrutiny next month when the agency holds its public meeting on the safety of this class of drugs [[01/11/04a]]. The company’s new cholesterol-lowering agent, Zetia (ezetimibe), which is co-marketed with Schering-Plough, rose 53% to $328 million.
Looking to 2005, Merck confirmed that it is expecting to see full-year earnings per share in the $2.42 to $2.52 range – as much as 7% down on the $2.61 recorded in 2004 – with the first quarter looking set to come in at between $0.54 and $0.58 per share.