Rebif sales lift Merck Serono's second-quarter revenue 2 percent

Second-quarter sales in Merck KGaA's drug unit Merck Serono increased 2 percent to 1.5 billion euros ($2.2 billion), boosted by revenue from Rebif, the company announced Wednesday. Sales of the multiple sclerosis treatment rose 5.2 percent to 423 million euros ($611 million), while Erbitux revenue declined 3 percent to 204 million euros ($295 million), which the company noted was mainly due to a drop in Japanese sales.

Merck posted second-quarter overall revenue of 2.6 billion euros ($3.8 billion), up 16 percent compared with the same period last year, with the figure boosted by the recent acquisition of Millipore. However, the company posted a net loss for the quarter of 85.9 million euros ($124.1 million), compared with a profit a year ago of 183.4 million euros ($265 million), due to one-off charges of 319 million euros ($461 million). Analysts had been predicting a profit for the second quarter of 236 million euros ($341 million).

Merck noted that the one-off charges included 46 million euros ($66 million) related to the purchase of Millipore, as well as 263 million euros ($380 million) from its Merck Serono division. The company said the latter figure included impairment charges related to safinamide, which last year failed to meet the goal of a late-stage Parkinson’s disease study, as well as a charge for the discontinued cancer drug IMO-2055 that was in-licensed from Idera Pharmaceuticals.

CEO Karl-Ludwig Kley noted that the company "produced solid revenue figures for the second quarter" that "will give us a healthy basis on which our new management team can build." Earlier this month, the company announced two new appointments in its drug unit, which followed the hiring of a new head for the division in December. However, Kley said that "improvements are still needed, especially with respect to the quality of the pharmaceutical pipeline," adding that Merck is "striving for leaner processes and we are reviewing our cost structures."

"This is an attempt to clear the decks," commented Sanford C. Bernstein analyst Jack Scannell. He suggested that the company is "going through the assets and determining what they’re worth."

Kley noted that due to the one-time charges, the company expects that "operating profit will be approximately one billion euros in 2011." In April, Merck forecast that operating profit would grow by between 35 percent and 45 percent this year from the 1.1 billion euros ($1.6 billion) reported in 2010. The company indicated that full-year revenue will now be between 10 billion euros ($14.4 billion) and 10.4 billion euros ($15 billion), down from a previous forecast of more than 10 billion euros.

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