April 19 (Bloomberg) -- Merck & Co.'s first-quarter profit rose 12 percent as demand for asthma and cholesterol drugs along with the cancer vaccine Gardasil made up for the loss of sales of older medicines to generic competition.

Net income climbed to $1.7 billion, or 78 cents a share, from $1.52 billion, or 69 cents, a year earlier, Merck said today in a statement. Profit excluding costs from plant closings and job cuts was 84 cents, beating the average estimate of analysts before Merck gave an earnings preview late last week.

Sales of the cholesterol pills Vytorin and Zetia, the asthma drug Singulair and Gardasil, which protects against cervical cancer, added to earnings. The new diabetes pill Januvia also contributed. Chief Executive Officer Richard Clark has fired workers and shut plants to help offset the loss of $800 million in revenue from the cholesterol drug Zocor after patent protection ended last year.

``Merck's strong performance is being driven by cost-cutting via restructuring and strong sales of new products, namely Gardasil and Januvia, both of which have $2 billion peak annual sales potential,'' said Deutsche Bank analyst Barbara Ryan in a research report today.

Earnings were also helped by a $188 million gain from selling some of its smaller drugs to Salix Pharmaceuticals Ltd. and Iroko Pharmaceuticals LLC.

Total revenue increased 6.7 percent to $5.77 billion.

Shares of Merck, based in Whitehouse Station, New Jersey, rose 46 cents to $50.15 at 4 p.m. in New York Stock Exchange composite trading. The stock has gained 46 percent in the past 52 weeks.

Second-Quarter Outlook

Merck said it expects to report second-quarter earnings of 62 cents to 68 cents a share, down from 69 cents a year ago, on revenue similar to the first quarter. Excluding restructuring costs, profit will be 67 to 71 cents a share, in line with the 67-cent average estimate in a Bloomberg survey of 17 analysts.

Earnings in the quarter will be reduced by higher research spending and increasing costs from job cuts, the company said.

Merck has struggled to increase profits since the loss of $2.5 billion in annual revenue from the pain pill Vioxx, which it pulled from the market in September 2004 after a study showed the drug raised the risk of heart attacks and strokes.

To offset the lost sales of Vioxx and Zocor, Merck has been squeezing revenue out of existing products and won approval for five new drugs and vaccines last year.

Merck faces 27,250 lawsuits related to Vioxx, down from 27,400 three months ago, the company said today. Merck said it wasn't adding money to its Vioxx litigation reserves, which stood at $858 million at the end of 2006. Merck has already spent $785 million on Vioxx legal costs.

Drug Sales

Sales of the asthma treatment Singulair, Merck's top-selling product, climbed 25 percent to $1 billion. The company said it expects full-year sales of Singular to be $3.9 billion to $4.2 billion, $200 million more than the company forecast.

Combined sales of Vytorin and Zetia increased 47 percent to $1.2 billion.

Sales of Merck vaccines more than tripled to $903 million from $272 million a year earlier, helped by sales of Gardasil and the Rotateq vaccine to protect against rotavirus. Merck raised its forecast for vaccine sales this year by $500 million to $3.3 billion to $3.7 billion.

Gardasil, which came on the market in June, had $365 million in sales. UBS Securities LLC analyst Roopesh Patel had expected sales of $245 million. Januvia, the first of a new class of diabetes drugs that enhance the body's mechanisms for regulating blood sugar, had $87 million in sales, beating Patel's $70 million estimate.

To contact the reporter on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net.

Last Updated: April 19, 2007 16:10 EDT