Merck & Co.'s third-quarter profit more than tripled as a gain from the sale of its stake in an animal-health joint venture masked the impact of generic competition on sales and continued weakness for the cholesterol drugs it sells jointly with merger partner Schering-Plough Corp. (SGP).
But the drug maker's core results beat estimates, prompting it to boost the bottom end of its 2009 earnings target as it affirmed its revenue view.
Merck's $49 billion acquisition of Schering which remains on track to close this quarter, stemmed from an effort to bolster and diversify its pipeline at a time of fierce generic competition, pricing pressure and challenges in bringing new drugs to market. To satisfy regulators, Merck sold its 50% stake in the Merial animal-health joint venture to partner Sanofi-Aventis SA (SNY) for $4 billion. It also has named the management team for the post-merger era, eyeing growth opportunities in emerging markets, biologics and vaccines.
Merck's profit rose to $3.42 billion, or $1.61 a share, from $1.09 billion, or 51 cents a share, a year earlier. Excluding items, notably the Merial gain, earnings rose to 90 cents from 80 cents.
Sales rose 1.8% to $6.05 billion, or 5% excluding foreign-exchange impacts.
Analysts polled by Thomson Reuters were expecting earnings, excluding items, of 82 cents a share on revenue of $6.01 billion.
Gross margin rose to 76.4% from 75.1%.
Sales of the Gardasil cervical-cancer vaccine fell 22%. Merck has said it sees flat Gardasil sales in 2009. Last week, the Food and Drug Administration found Gardasil to be safe and effective in protecting males from genital warts. A panel of experts advising The Centers for Disease Control and Prevention is scheduled this week to decide whether to recommend its routine use in boys, a move that could lead states to mandate inoculation and may prompt health insurers to pay for it.
Merck said its sales from Merck's cholesterol-drug joint venture with Schering-Plough fell 7%. The venture has been under pressure since an early 2008 study raised questions about the safety and effectiveness of the drugs Vytorin and Zetia.
Asthma and allergy drug Singulair--Merck's biggest product--rose 5%. U.S. sales have been hurt by an over-the-counter version of rival drug Zyrtec by Johnson & Johnson (JNJ) as well as concerns about a Food and Drug Administration alert of a possible association between Singulair and suicide.
Earlier Thursday, Schering-Plough reported profit fell 16% on increased charges and the drop in cholesterol-drug sales.
-By Mike Barris, Dow Jones Newswires; 212-416-2330; email@example.com