Major cost cuts enabled drugmaker Merck & Co. to offset lower first-quarter sales as generic competition continues to hurt sales of former blockbuster medicines. Merck's profit rose 7 percent, trouncing Wall Street expectations.
Merck said it plans to rely on its pipeline of experimental drugs for future sales. That would make it an exception to the trend among many other drugmakers, which are pursuing big acquisitions to keep sales growing.
The maker of the diabetes pill Januvia said Tuesday that net income was $1.71 billion, or 57 cents per share, up from $1.59 billion, or 52 cents per share, a year earlier.
Excluding $896 million in restructuring and acquisition charges, net income was $2.6 billion, or 88 cents per share—9 cents better than analysts expected.
In mid-afternoon trading, Merck's shares rose $1.71, or 3 percent, to $58.40.
Revenue totaled $10.26 billion, down 4 percent and just below the $10.44 billion analysts expected.
Pharmaceutical sales dropped 5 percent, to $8.45 billion, as cheaper generic copycat pills hammered several off-patent drugs that once brought in billions each year: asthma and allergy pill Singulair, allergy spray Nasonex and blood pressure drugs Cozaar and Hyzaar.
Merck's top sellers, Type 2 diabetes pills Januvia and Janumet, brought in a combined $1.33 billion, up 3 percent. Sales jumped 10 percent to $604 million for immune disorder drug Remicade, and also rose for HIV drug Isentress and several other products.
Lower sales of nonprescription Claritin allergy pills dragged down consumer health sales 4 percent to $454 million. Sales of veterinary medicines declined 3 percent to $813 million.
Analysts were surprised by the level of cost cuts: 8 percent for administration and marketing expenses and 17 percent for research spending as new research head Roger Perlmutter continues to cut Merck's least-promising programs. Merck, based in Whitehouse Station, N.J., reduced its global workforce by 2,000 in the quarter, to 74,000.
"It is a necessary but not sufficient part of their execution strategy," Edward Jones analyst Judson Clark said of the cuts. He said Merck also must get key drugs in its pipeline approved to do well.
CEO Kenneth Frazier told analysts during a conference call that Merck has promising experimental drugs in testing for hepatitis C, HIV and various cancers.
"We're excited by our pipeline and what's to come," he said.
Meanwhile, Merck's two tablets for gradually reducing seasonal allergies to grass and ragweed were recently approved. Because patients must start the daily immunotherapy tablets a few months before allergy season begins, Merck said it's now promoting Ragwitek to doctors but it's too late to promote Grasstek this year.
With the recent spurt of proposed acquisitions and asset swaps in the pharmaceutical industry, analysts asked if Merck would do such a deal. Frazier said small deals might be possible, but he's focused on growth through new drugs for unmet medical needs.
"Our preferred (growth) route is through innovation rather than consolidation," he said.
Merck reaffirmed its 2014 forecast for profit of $2.15 to $2.47 per share, prompting analysts to ask why it didn't raise its forecast. Merck said that's because Venezuela may devalue its currency, which would decrease the value of sales there.
"Anytime you see a nine-cent beat, you'd like to see guidance walk up," so Merck may expect a slightly softer second quarter, Clark said.
Explore further: Generic competition cuts Merck's Q1 sales, profit
© 2014 The Associated Press. All rights reserved.
Medical Xpress on facebook
Related Stories
Generic competition cuts Merck's Q1 sales, profit
May 01, 2013
Drugmaker Merck & Co. is reporting lower first-quarter results and cutting its 2013 profit forecast by 15 cents a share. It also is announcing a huge share buyback, up to $15 billion worth of its stock.
Merck Q4 net drops 14 pct. on generic competition
Feb 05, 2014
Merck & Co. reported a 14 percent decline in fourth-quarter profit as generic competition continued to cut into sales of one-time blockbuster medicines, and unfavorable currency exchange rates reduced overseas revenue.
Merck 3Q net income falls on charges, lower sales
Oct 28, 2013
Merck & Co. said Monday that its third-quarter profit plunged 35 percent because of competition from generic drugs, lower sales of its top-selling medicine, and restructuring and acquisition charges. It still beat Wall Street's ...
Merck's 2Q net falls on charges, but sales rise
Jul 27, 2012
Merck & Co.'s second-quarter net income fell 11.4 percent as slightly higher sales were offset by acquisition and restructuring costs. However, the drugmaker beat Wall Street expectations, and Merck shares ...
Merck 2Q profit tumbles on charges, lower revenue (Update)
Jul 30, 2013
Drugmaker Merck & Co.'s second-quarter profit fell by half as generic competition slashed revenue from several older medicines and sales of its top drug barely budged.
Recommended for you
Gender theorist questions transgender "phenomenon"
7 hours ago
A respected feminist theorist is calling for a radical rethink of society's acceptance of transgenderism.
A hearing aid or a wheelchair does not have to look uncool
Apr 28, 2014
How can a designer counter the stigma that is attached to certain products? This is the theme of the doctoral dissertation that Kristof Vaes will be defending on 28 April at TU Delft.
New drug sales help boost Novartis Q1 profit (Update)
Apr 24, 2014
Strong new drug sales and higher operating income helped Swiss pharmaceutical firm Novartis AG report a 24 percent rise in first-quarter profit.
Amgen misses 1Q views as higher costs cut profit
Apr 22, 2014
Despite higher sales, biotech drugmaker Amgen's first-quarter profit fell 25 percent as production and research costs rose sharply, while the year-ago quarter enjoyed a tax benefit. The company badly missed ...
AMP publishes curriculum recommendations for medical laboratory scientists
Apr 22, 2014
The Association for Molecular Pathology (AMP) released a report today in The Journal of Molecular Diagnostics on recommendations for a molecular diagnostics curriculum at both the baccalaureate and master's levels of edu ...
Valeant, Ackman make $45.6B Allergan bid
Apr 22, 2014
Valeant Pharmaceuticals and activist investor Bill Ackman have unveiled details of their offer to buy Botox maker Allergan, proposing a cash-and-stock deal that could be worth about $45.6 billion.
User comments
© Medical Xpress 2011-2014, Science X network
Major cost cuts enabled drugmaker Merck & Co. to offset lower first-quarter sales as generic competition continues to hurt sales of former blockbuster medicines. Merck's profit rose 7 percent, trouncing Wall Street expectations.
Merck said it plans to rely on its pipeline of experimental drugs for future sales. That would make it an exception to the trend among many other drugmakers, which are pursuing big acquisitions to keep sales growing.
The maker of the diabetes pill Januvia said Tuesday that net income was $1.71 billion, or 57 cents per share, up from $1.59 billion, or 52 cents per share, a year earlier.
Excluding $896 million in restructuring and acquisition charges, net income was $2.6 billion, or 88 cents per share—9 cents better than analysts expected.
In mid-afternoon trading, Merck's shares rose $1.71, or 3 percent, to $58.40.
Revenue totaled $10.26 billion, down 4 percent and just below the $10.44 billion analysts expected.
Pharmaceutical sales dropped 5 percent, to $8.45 billion, as cheaper generic copycat pills hammered several off-patent drugs that once brought in billions each year: asthma and allergy pill Singulair, allergy spray Nasonex and blood pressure drugs Cozaar and Hyzaar.
Merck's top sellers, Type 2 diabetes pills Januvia and Janumet, brought in a combined $1.33 billion, up 3 percent. Sales jumped 10 percent to $604 million for immune disorder drug Remicade, and also rose for HIV drug Isentress and several other products.
Lower sales of nonprescription Claritin allergy pills dragged down consumer health sales 4 percent to $454 million. Sales of veterinary medicines declined 3 percent to $813 million.
Analysts were surprised by the level of cost cuts: 8 percent for administration and marketing expenses and 17 percent for research spending as new research head Roger Perlmutter continues to cut Merck's least-promising programs. Merck, based in Whitehouse Station, N.J., reduced its global workforce by 2,000 in the quarter, to 74,000.
"It is a necessary but not sufficient part of their execution strategy," Edward Jones analyst Judson Clark said of the cuts. He said Merck also must get key drugs in its pipeline approved to do well.
CEO Kenneth Frazier told analysts during a conference call that Merck has promising experimental drugs in testing for hepatitis C, HIV and various cancers.
"We're excited by our pipeline and what's to come," he said.
Meanwhile, Merck's two tablets for gradually reducing seasonal allergies to grass and ragweed were recently approved. Because patients must start the daily immunotherapy tablets a few months before allergy season begins, Merck said it's now promoting Ragwitek to doctors but it's too late to promote Grasstek this year.
With the recent spurt of proposed acquisitions and asset swaps in the pharmaceutical industry, analysts asked if Merck would do such a deal. Frazier said small deals might be possible, but he's focused on growth through new drugs for unmet medical needs.
"Our preferred (growth) route is through innovation rather than consolidation," he said.
Merck reaffirmed its 2014 forecast for profit of $2.15 to $2.47 per share, prompting analysts to ask why it didn't raise its forecast. Merck said that's because Venezuela may devalue its currency, which would decrease the value of sales there.
"Anytime you see a nine-cent beat, you'd like to see guidance walk up," so Merck may expect a slightly softer second quarter, Clark said.
Explore further: Generic competition cuts Merck's Q1 sales, profit
© 2014 The Associated Press. All rights reserved.
Medical Xpress on facebook
Related Stories
Generic competition cuts Merck's Q1 sales, profit
May 01, 2013
Drugmaker Merck & Co. is reporting lower first-quarter results and cutting its 2013 profit forecast by 15 cents a share. It also is announcing a huge share buyback, up to $15 billion worth of its stock.
Merck Q4 net drops 14 pct. on generic competition
Feb 05, 2014
Merck & Co. reported a 14 percent decline in fourth-quarter profit as generic competition continued to cut into sales of one-time blockbuster medicines, and unfavorable currency exchange rates reduced overseas revenue.
Merck 3Q net income falls on charges, lower sales
Oct 28, 2013
Merck & Co. said Monday that its third-quarter profit plunged 35 percent because of competition from generic drugs, lower sales of its top-selling medicine, and restructuring and acquisition charges. It still beat Wall Street's ...
Merck's 2Q net falls on charges, but sales rise
Jul 27, 2012
Merck & Co.'s second-quarter net income fell 11.4 percent as slightly higher sales were offset by acquisition and restructuring costs. However, the drugmaker beat Wall Street expectations, and Merck shares ...
Merck 2Q profit tumbles on charges, lower revenue (Update)
Jul 30, 2013
Drugmaker Merck & Co.'s second-quarter profit fell by half as generic competition slashed revenue from several older medicines and sales of its top drug barely budged.
Recommended for you
Gender theorist questions transgender "phenomenon"
7 hours ago
A respected feminist theorist is calling for a radical rethink of society's acceptance of transgenderism.
A hearing aid or a wheelchair does not have to look uncool
Apr 28, 2014
How can a designer counter the stigma that is attached to certain products? This is the theme of the doctoral dissertation that Kristof Vaes will be defending on 28 April at TU Delft.
New drug sales help boost Novartis Q1 profit (Update)
Apr 24, 2014
Strong new drug sales and higher operating income helped Swiss pharmaceutical firm Novartis AG report a 24 percent rise in first-quarter profit.
Amgen misses 1Q views as higher costs cut profit
Apr 22, 2014
Despite higher sales, biotech drugmaker Amgen's first-quarter profit fell 25 percent as production and research costs rose sharply, while the year-ago quarter enjoyed a tax benefit. The company badly missed ...
AMP publishes curriculum recommendations for medical laboratory scientists
Apr 22, 2014
The Association for Molecular Pathology (AMP) released a report today in The Journal of Molecular Diagnostics on recommendations for a molecular diagnostics curriculum at both the baccalaureate and master's levels of edu ...
Valeant, Ackman make $45.6B Allergan bid
Apr 22, 2014
Valeant Pharmaceuticals and activist investor Bill Ackman have unveiled details of their offer to buy Botox maker Allergan, proposing a cash-and-stock deal that could be worth about $45.6 billion.
User comments
© Medical Xpress 2011-2014, Science X network
0 comments:
Post a Comment