Legal charges relating to the defence on lawsuits alleging injury caused by Vioxx, as well as plummeting sales of cholesterol-lowerer Zocor, both took their toll on profits at US drugmaker Merck & Co in the third quarter.

Net income fell by a third to $941 million, pegged back by the $598 million that Merck added to its fighting fund for Vioxx (rofecoxib), while sales reached $5.41 billion in the quarter, flat compared to a year ago but well ahead of analyst expectations.

This is the second charge Merck has had to take in order to defend Vioxx in the courts; earlier, the company set aside $685 million for that purpose, and thousands of cases are still waiting to be heard in the courts. The company maintains that fighting each case separately will work out cheaper than entering into a broad settlement agreement.

As expected, the impact of generic competition to Zocor (simvastatin) in the USA was brutal, with sales down 65% to $371 million. But Merck rallied in the quarter because of the contribution from its joint venture with Schering-Plough to sell the cholesterol drugs Zetia (ezetimibe) and Vytorin (ezetimibe and simvastatin), which together brought in more than $1 billion as well as a healthy 25% increase in sales of asthma drug Singulair (montelukast), bringing in $868 million.

Merck’s vaccines unit also bolstered the financials, with a 64% increase in turnover to $555 million, helped by the introduction of three new products in recent months, namely cervical cancer vaccine Gardasil, Rotateq for preventing childhood diarrhoea and Zostavax, which targets the virus that causes shingles.

There was disappointing news for Merck’s blockbuster osteoporosis drug Fosamax (alendronate), which saw a 1% dip in sales to $771 million on the back of generic competition outside the USA.

Merck raised its full-year 2006 earnings per share forecast slightly to $2.48-$2.52 per share from the previous $2.40-$2.48 range, but even at the high end of the forecasts this will still represent a decline on last year’s EPS of $2.53.