Merck & Co.'s (MRK) first-quarter net income fell 56% on
restructuring and merger-related costs and a year-ago payment from
an AstraZeneca PLC (AZN) partnership.
The company also cut its 2009 revenue estimate to $23.2 billion
to $23.7 billion from $23.7 billion to $23.95 billion while
reiterating its profit target.
Shares fell 2.8% premarket to $24.51 as the quarter's results
missed analysts' expectations.
Expiring patents and soaring development costs are propeling
drug makers into one another's arms. Merck's roughly $41 billion
cash-and-stock deal to acquire Schering-Plough Corp. (SGP)
continued a consolidation race that began this year with Pfizer
Inc.'s (PFE) planned acquisition of Wyeth (WYE). Earlier Tuesday,
Schering-Plough reported first-quarter net income more than
doubled, topping expectations, amid prior-year acquisition
charges.
The Merck-Schering-Plough deal would bring together two
companies which already have a relationship through their
cholesterol-drug venture. That effort has been under pressure for a
year following an early 2008 study that raised questions about the
safety and effectiveness of the drugs Vytorin and Zetia. The
venture's sales fell 23% in the first quarter.
Merck's net income dropped to $1.43 billion, or 67 cents a
share, from $3.31 billion, or $1.52 a share, a year earlier.
Excluding items including the gains and charges, earnings fell to
74 cents from 89 cents.
Sales fell 7.5% to $5.39 billion, with the stronger dollar
contributing 3 percentage points of the decline.
Analysts polled by Thomson Reuters were expecting earnings,
excluding items, of 77 cents a share on revenue of $5.77
billion.
Gross margin fell to 75.2% from 78.7%, amid restructuring costs
and a drop in volume.
Sales of Merck's hit cervical-cancer vaccine, Gardasil, fell
33%. Merck has said it sees flat Gardasil sales in 2009.
Asthma and allergy drug Singulair recorded a 4% sales decline.
U.S. sales have been hurt by an over-the-counter version of rival
drug Zyrtec by Johnson & Johnson (JNJ) as well as by concerns
about a Food and Drug Administration alert of a possible
association between Singulair and suicide.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com