Merck’s Q2 profit falls, but beats expectations
22 Jul 2009
Merck & Co on Tuesday announced a second-quarter fall in profits, but nonetheless beat market expectations. Profits were hurt by lower sales of its cholesterol drugs, but income from partnerships and a rebound in the sales of asthma drug Singulair helped the drugmaker.
Merck, which is on the verge of buying rival Schering-Plough Corp, said profit dropped less than analysts expected on savings from job cuts. It earned 83 cents per share, excluding special items.
Results were helped by a 10 per cent decline in marketing and administrative expenses. Moreover, the drugmaker's effective tax rate, excluding special charges and merger-related costs, was 20.4 per cent, a benefit of about 5 percentage points due to favourable tax settlements.
Revenue dropped 2 per cent to $5.9 billion, the company said. Chief executive officer Richard T Clark aims to reverse the sales decline partly by spending about $44 billion to buy Schering-Plough for its experimental treatments.
Clark also is in the process of firing more than 7,000 workers to reduce costs to help offset falling sales of its cholesterol pills and Gardasil cervical cancer vaccine.
A bright spot in the earnings report was Singulair, Merck's asthma drug whose sales have steadily declined in the past year due to safety concerns. Its quarterly sales jumped 16 per cent to $1.3 billion. Sales of Januvia, a relatively new diabetes treatment, rose 38 per cent to $462 million.
