Merck Posts Profit, Sales Down on Vioxx

Monday, October 24th 2005, 10:40 am
By: News On 6

TRENTON, N.J. (AP) _ Merck & Co. posted a 7 percent increase in third-quarter profit Monday as lower costs for materials and production offset a slight dip in revenues, mainly due to lost sales from Vioxx, the blockbuster pain pill the drugmaker withdrew a year ago over safety problems.

Merck, which also makes Zocor for high cholesterol and the osteoporosis treatment Fosamax, reported net income of $1.42 billion, or 65 cents per share, in the July-September period. That beat by 3 cents a share the consensus forecast of analysts surveyed by Thomson Financial.

In the same period of 2004, Whitehouse Station-based Merck posted net income of $1.33 billion, or 60 cents per share, and took a charge of $141 million for costs related to withdrawing Vioxx. Merck withdrew the popular arthritis drug from the market on Sept. 30, 2004 after its own research showed Vioxx doubled the risk of heart attack and stroke after 18 months of use.

Merck also reported charges related to ongoing worldwide job cuts: $80 million in 2005's third quarter compared to $34 million in 2004's third quarter.

In this year's third quarter, revenues totaled $5.42 billion, down 2 percent from $5.54 billion in 2004's third quarter.

Its shares rose 11 cents to $26.29 in morning trading on the New York Stock Exchange.

Merck got a boost from sales of Singulair, a drug for asthma and seasonal allergies which rose 11 percent to $692 million, but sales of Fosamax were flat and sales of Zocor, Merck's No. 1 drug, fell 14 percent to $1 billion.

Richard T. Clark, who took over as Merck's chief executive officer and president in May, said the quarter was consistent with expectations.

``We must improve our performance over the long term, and I truly believe we can,'' Clark said in a prepared statement.

Merck said it expects earnings per share for 2005 to total $2.47 to $2.51, excluding a charge taken in the second quarter. Analysts were forecasting $2.49.

In its earnings release, Merck said that as of Sept. 30, it has been named as a defendant in about 6,400 lawsuits over Vioxx _ about 160 of them potential class-action suits.

About half the lawsuits have been filed in Merck's home state of New Jersey, where more than 700 additional suits have been filed in October. Nearly all the suits are product liability, or personal injury, lawsuits. In the first lawsuit to reach the courts, a Texas jury found Merck liable in a Vioxx user's death. The second lawsuit is currently being tried in Atlantic City.

For the first nine months of 2005, net income was $3.51 billion, or $1.59 per share. That was down 25 percent from $4.71 billion, or $2.11 per share, in the first three quarters of 2004. Nine-month revenue fell 5.5 percent to $16.25 billion from $17.19 billion a year ago.

The 2005 nine-month results include a $640 million tax charge in the second quarter, mainly for repatriation of foreign profits.