As expected, Merck & Co has posted a major decline in earnings for the first quarter – down 15% to $1.37 billion or $0.62 per share – and turnover fell 4.8% to $5.36 billion as the US giant comes to terms with the financial effects of last year’s withdrawal of the pain killer Vioxx (rofecoxib) [[01/10/04a]].
However, it is not just the loss of Vioxx revenues that it is hitting Merck as sales of its cholesterol-lowerer Zocor (simvastatin) are in sharp decline. Turnover of the drug fell 15% to $1.1 billion due to generic competition around the world, a situation that can only get worse when Zocor comes off patent in the USA next year.
Amid the gloom, however, many Merck’s products performed well, with the asthma treatment, Singulair (montelukast), up 18% to $735 million ,while the anti-hypertensives, Cozaar (losartan) and Hyzaar (losartan plus hydrochlorothiazide) reached $719 million, an increase of 14% from a year ago. The osteoporosis therapy Fosamax (alendronate) sneaked up 2% to $772 million.
There was also good news for Merck’s joint venture with Schering-Plough, thanks mainly to the new cholesterol drugs Vytorin (ezetimibe/simvastatin) and Zetia (ezetimibe) which are softening the blow of declining Zocor sales. Vytorin, which was approved by the US Food and Drug Administration last summer [[26/07/04a]], contributed $179 million to first-quarter turnover, while Zetia sales jumped 75% to $332 million. A JV with AstraZeneca also boosted Merck’s coffers to the tune of $435 million.
However, the Vioxx problem is haunting the firm, which noted that as of March 31, it faced about 2,300 lawsuits from 4,600 plaintiff groups alleging personal injury related to the drug. The company has set aside $675 million for legal costs but fears that its insurance coverage may not provide adequate coverage [[14/03/05c]].
Merck also acknowledged that it is co-operating with the UK’s Medicines and Healthcare products Regulatory Agency regarding “compliance by the company with EU reporting requirements in connection with Vioxx.” This is thought to refer to claims that the firm’s reporting of the painkiller’s side effects to the relevant authorities may not have been as prompt as they should have been.
Nevertheless, Merck is bullish about the future and believes that earnings in the second quarter will be around $0.60-$0.64 per share. It also has high hopes for its pipeline, notably muraglitizar, the first of a new class of oral drugs for treating type 2 diabetes, partnered with Bristol-Myers Squibb, which has been submitted to the FDA and may be approved some time this year.