Merck & Co has posted a loss for the fourth quarter and a healthy revenue rise, but is predicting a tough time for the next couple of years.
A loss of $531 million compared with like, year-earlier profits of $6.49 billion, the difference being principally due to a $1.7 billion charge related to vorapaxar, its much-touted blood clot drug which has suffered clinical setbacks of late. Also, the year-earlier quarter included a $7.5 billion gain associated with Merck’s Schering-Plough acquisition.
Revenues reached $12.09 billion, up 20%. Merck’s best-selling treatment was once again the asthma/allergic rhinitis drug Singulair (montelukast), up 7% to $1.35 billion, though revenues from the antihypertensives Cozaar (losartan) and Hyzaar (losartan plus hydrochlorothiazide) slumped 57% to $415 million, due to losing marketing exclusivity in the USA and the major European markets.
Sales of the cholesterol drugs Vytorin (ezetimibe plus simvastatin) and Zetia (ezetimibe) reached $562 million and $629 million, down 3% and up 2% respectively. The diabetes drug Januvia (sitagliptin) performed well, generating $675 million in the quarter, up 21%, while Janumet (sitagliptin plus metformin) brought in $288 million, a leap of 42%. Turnover from the HIV drug Isentress (raltegravir) reached $313 million, up 34%, though sales of the cervical cancer jab Gardasil fell 22% to $221 million.
As for S-P’s products, the anti-inflammatory Remicade (infliximab), the Johnson & Johnson drug which Merck sells outside the USA, contributed $710 million, up 12%, while the anti-allergy medication Nasonex/Asmanex (mometasone) brought in $303 million, a rise of 6%.
Sales of the brain cancer drug Temodar (temozolomide) reached $266 million (-9%), and the hepatitis C treatment PegIntron (pegylated interferon) fell 8% to $198 million. Fertility treatment Follistim/Puregon (follitropin beta) and the contraceptive Nuvaring had sales of $138 and $145 million, respectively, down 7% and up 7%.
For full-year 2011, Merck expects earnings per share of $3.64-$3.76, below analyst expectations. Revenues are expected to grow in the low to mid-single digits from the base of $46.00 billion for full year 2010, though the forecasts assume the company will retains rights to Remicade and the newer arthritis treatment Simponi (golimumab), which are at the centre of a dispute with J&J.
Merck also noted that “given industry pressures such as greater European Union austerity measures and the additional impact of US health care reform”, as well as problems with vorapaxar, the company has withdrawn its previous long-term target of high single-digit EPS compound annual growth rate from 2009 to 2013.
New chief executive Kenneth Frazier said on a conference call that the latter decision because the firm is looking to maintain or increase its R&D spend. He noted that “it isn’t we couldn’t cut costs enough to make long-term guidance [but] we couldn’t do that fast enough without sacrificing opportunities”.
Mr Frazier added that Merck “will continue to innovate, make disciplined investments in our business and continue to drive out inefficiencies in our operations”. This commitment to R&D contrasts with some other major players in the industry but investors were concerned and Merck shares fell back.
