NVS Novartis AG

   By Donato Paolo Mancini 
 

Merck KGaA (MRK.XE) said Tuesday that despite attaining organic growth its first-quarter sales declined, dragged down by currency headwinds.

The company reported a 4.4% sales decline to 3.69 billion euros ($4.41 billion), affected by negative exchange rates. Its net income decreased to EUR341 million, dropping 35% from EUR523 million in the same period a year earlier.

Earnings before interest, taxes, depreciation and amortization before one-time items, or Ebitda--an important figure for the company--were EUR1.01 billion, down from EUR1.24 billion. The company said favorable one-time effects in its healthcare sector buoyed numbers from the year before.

According to consensus estimates compiled by FactSet, the company was expected to post sales of EUR3.70 billion, Ebitda of EUR998 million and net income of EUR596 million.

Merck said it continues to expect a moderate organic net sales increase of between 3% and 5% in 2018, with sales in the region of EUR15 billion to EUR15.5 billion. The planned sale of its consumer-health business to Procter & Gamble Co. (PG) is likely to reduce group sales by between EUR900 million-EUR1 billion, lowering sales estimates to between EUR14 billion and EUR14.5 billion. Ebitda before exceptional items are expected to be between EUR3.95 billion and EUR4.15 billion.

The Darmstadt, Germany-based multinational's drug pipeline suffered a series of setbacks. Drug Avelumab, co-developed with Pfizer Inc. (PFE), didn't deliver in a lung-cancer study, whereas relapsing multiple sclerosis drug Evobrutinib met a Phase 2 trial endpoint.

Tepotinib, a cancer drug, received its first regulatory designation in Japan, with analysts closely watching its potential to treat a specific sub-population--at least 13,000 individuals in the U.S.--of lung cancer patients affected by mutation METex14. Wimal Kapadia, an analyst at Bernstein, sees Novartis AG's (NOVN.EB) Capmatinib and Pfizer's Xalkori as likely competitors to the drug.

Write to Donato Paolo Mancini at donatopaolo.mancini@dowjones.com

(END) Dow Jones Newswires

May 15, 2018 01:49 ET (05:49 GMT)

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