Friday, August 15, 2014

Merck second quarter profit tops estimates on strong consumer sales

A view of the Merck & Co. campus in Linden, New Jersey March 9, 2009.

Credit: Reuters/Jeff Zelevansky

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(Reuters) - Merck & Co Inc reported better-than-expected quarterly results on Tuesday, with sales of consumer products and medicines for arthritis and HIV helping to offset the impact of generic competition on other drug sales.

Merck, the No. 2 U.S. drugmaker, earned $2.03 billion, or 68 cents per share, in the second quarter. That compared with $906 million, or 30 cents per share, in the year-earlier period, when it took charges for acquisitions and restructuring.

Excluding special items, Merck earned 85 cents per share. Analysts, on average, expected 81 cents, according to Thomson Reuters I/B/E/S.

Global revenue slipped 1 percent to $10.93 billion, but exceeded expectations of $10.6 billion.

Merck shares rose nearly 1 percent to $58.50 in premarket trading.

Merck, like many rivals in the drug industry, has been busy with deal making in recent months. On May 6, it agreed to sell its consumer care business to Germany’s Bayer AG for $14.2 billion, and expects to close the deal in the second half of the year.

Industry analysts had said proceeds from the deal would allow Merck to step up its purchases of costly biotechnology drugs to bolster its drug pipeline.

A month later, on June 9, Merck agreed to buy Idenix Pharmaceuticals Inc for $3.85 billion, hoping to combine the two companies' most promising drugs to produce a faster, more effective cure for hepatitis C.

On Tuesday, Merck said it expected full-year earnings of $3.43 to $3.53 per share, tightening its earlier forecast of $3.35 to $3.53. The new outlook included expected dilution of up to 9 cents per share from the Bayer and Idenix deals, Merck said.

Merck got its best performance in the quarter from consumer care brands, such as its Miralax laxative and Afrin cold remedy, as sales jumped 19 percent to $583 million. Sales of HIV treatment Isentress rose 10 percent to $453 million, while Remicade arthritis drug sales increased 15 percent to $607 million.

By contrast, sales of prescription drugs slipped 2 percent to $9.1 billion, hurt by generic competition for its Nasonex nasal allergy treatment. Nasonex sales slid 21 percent to $258 million.

Combined sales of Merck's biggest drugs, its Januvia and Janumet treatments for diabetes, rose 2 percent to $1.58 billion. Their sales growth has slowed this year due to competition from newer oral diabetes drugs, and pressured Merck to introduce new products that can fuel growth.

In Merck's year-ago results, special items included costs of $1.77 billion from acquisitions and $278 million for restructuring.

(Reporting by Ransdell Pierson; Editing by Bernadette Baum and Jeffrey Benkoe)

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