Merck's Net Income Skids 58%, Hurt by Patent Loss on Zocor [WSJ]
Vaccine, Arthritis Drug Boost Wyeth Net
By JOSEE ROSE
January 30, 2007 9:52 a.m.
Merck & Co. fourth-quarter net income dropped 58%, hurt by charges and the loss of market exclusivity for its blockbuster cholesterol drug Zocor.
The Whitehouse Station, N.J., company said net income plunged 58% to $473.9 million, or 22 cents a share, from $1.12 billion, or 51 cents a share, a year earlier.
Results from the latest quarter included restructuring charges of $55.8 million. Merck said it added $75 million to defense reserves for litigation over its withdrawn painkiller Vioxx during the quarter. The results also included the impact of the Sirna Therapeutics acquisition, as well as a $48 million charge to establish a legal-defense reserve for litigation that alleges Fosamax, Merck's osteoporosis drug, causes osteonecrosis of the jaw. Excluding items, earnings were 50 cents a share, down from 64 cents a share a year ago.
Revenue rose 4.8% to $6.04 billion, boosted by strong sales of allergy and asthma medication Singulair as well as Merck's joint venture with Schering-Plough Corp., which sells cholesterol drugs Vytorin and Zetia. Analysts had expected earnings of 50 cents a share on revenue of $5.37 billion.
Sales of Zocor, Merck's former top-selling drug that went off patent in June, plunged 65% to $379 million. Zocor sales are expected to drop to less than $1 billion in 2007 from an expected range of $2.6 billion to $2.9 billion this year, due to competition from generic rivals.
Fosamax had sales of $789 million, comparable to the year-ago quarter. The product was hurt by sales of generic alendronate sodium products outside the U.S. Fosamax will lose its U.S. patent in 2008.
Singulair sales increased 17% to $960 million. Sales of Vytorin and Zetia shot up 46% to $1.1 billion.
Merck's fourth-quarter results were also helped by newcomers Gardasil, a cervical-cancer vaccine, which had fourth-quarter sales of $155 million. The vaccine was approved in June, and has total 2006 sales of $235 million. Januvia, Merck's type 2 diabetes treatment which received federal approval in October, had fourth-quarter sales of $42 million.
Merck has been under considerable pressure since it pulled its Vioxx pain reliever off the market in September 2004 after a study showed it elevated the risk of heart attack and stroke in long-term users. Only about a dozen of the more than 27,000 lawsuits over Vioxx have been decided, and Merck has already paid more than $1 billion in legal costs. The company doesn't expect to have to increase this reserve every quarter, and plans to continue to monitor its legal-defense costs.
Merck said it expects 2007 earnings to be between $2.36 and $2.49 a share. Excluding items, the company forecasts $2.51 to $2.59 a share.
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Vaccine, Arthritis Drug Boost Wyeth Net
Wyeth reported its net income increased 17% in the fourth quarter, boosted by sales of its vaccine Prevnar and arthritis drug Enbrel.
The Madison, N.J., drug and consumer-products company said fourth-quarter net income rose to $855.4 million, or 63 cents a share, from $731.7 million, or 54 cents a share, a year earlier. Excluding items, earnings rose to $903.5 million, or 66 cents a share, from $746.9 million, or 55 cents a share. Revenue increased 10% to $5.22 billion.
On average, analysts had expected earnings of 71 cents a share on sales of $5.12 billion, according to Thomson Financial.
Fourth-quarter sales of Wyeth's best-selling drug, the antidepressant Effexor, increased 11% to $936.1 million and sales of Prevnar, a vaccine for pneumococcal disease, jumped 25% to $501.7 million. International sales of Enbrel, which Wyeth co-markets with Amgen Inc., jumped 40% to $416.1 million.
Wyeth, which also makes Centrum vitamins and Advil, said sales at its pharmaceuticals division rose 11%, sales of consumer-health products, which includes sales of products such as Chapstick and Preparation H, increased 2% and animal-health sales climbed 11%.
Wyeth expects 2007 earnings of $3.40 to $3.50 a share, excluding items, and full year revenue to log a mid-to-high single-digit percentage gain.
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