Merck & Co. posted fourth-quarter net income of $781 million, down 14 percent from the year-ago period, on generic competition and higher acquisition-related and restructuring costs, the company reported Wednesday. Meanwhile, sales in the quarter slipped 4 percent to $11.3 billion, falling short of analyst estimates of $11.4 billion. The drugmaker indicated that the revenue figure included a 3-percent negative impact due to foreign exchange.
Merck recorded $9.8 billion in prescription drug sales for the quarter, down 3 percent over the year-ago period, although the drugmaker noted that the figure included a 3-percent negative impact attributable to foreign exchange. For individual therapies, sales of Januvia fell 1 percent to $1.1 billion, with revenue from Janumet increasing 11 percent year-over-year to $503 million. Sales of Zetia climbed 6 percent to $716 million, while Remicade amassed $620 million in revenue, up 13 percent versus the year-ago period. Further, Isentress generated $442 million in revenue, 16 percent higher than the fourth quarter of 2012.
Additionally, Gardasil revenue declined 11 percent to $394 million, while sales of Singulair, which lost patent protection in the US in 2012 and in major European markets last year, fell 38 percent to $298 million. Merck added that revenue in emerging markets, which accounted for 21 percent of all prescription drug sales, grew 2 percent, including a 6-percent negative impact due to foreign exchange. The company added that its consumer healthcare unit recorded sales of $390 million, down 1 percent versus the same period last year.
For the full year, the drugmaker's sales totalled $44 billion, down 7 percent versus 2012 and slightly missing expectations of $44.2 billion. Meanwhile, net income declined from $6.2 billion in 2012 to $4.4 billion last year.
"In 2013 we took decisive action to sharpen our focus, reduce our cost structure and advance our innovative research and development," commented CEO Kenneth C. Frazier. In June last year, Merck R&D chief Roger Perlmutter, revealed that the drugmaker planned to restructure its R&D operations, with the company later announcing plans to reduce its workforce by 8500 positions to "sharpen" its research focus.
Merck previously indicated that it is also exploring "strategic options" for its consumer and animal health businesses, with a decision expected by the end of the year. "We have always viewed this as a very good business for Merck," Frazier said about the animal health unit, adding "the question is what are the alternatives and is there something that makes that more valuable to our shareholders in the longer term." Sources have suggested that Merck is considering a swap of its consumer health unit for Novartis' vaccine and animal-health divisions.
For 2014, Merck said it expects earnings per share of between $3.35 and $3.53, on revenue of $42.4 billion to $43.2 billion. The company noted that the guidance includes the expectation that AstraZeneca will buy Merck’s interest in Nexium and Prilosec mid-year, which contributed revenue of $920 million in 2013. Analysts forecast per-share earnings of $3.48 on revenue of about $43.4 billion. "Overall, I view this guidance as 'good enough,' given fairly widespread Street concerns about a 'mega-miss,'" commented ISI Group analyst Mark Schoenebaum, adding that investors remain more focused on prospects for Merck's experimental drugs.
Separately, Merck announced Wednesday that it entered three separate agreements with Amgen, Incyte and Pfizer to investigate combination regimens with its experimental anti-PD-1 immunotherapy MK-3475 across a number of tumour types.
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