The pharma giant's shares climbed Wednesday after it said earnings would top expectations
After withdrawing its arthritis painkiller drug Vioxx from the market in late 2004, Merck & Co. (MRK) has been struggling to recover by selling new products. Now the New Jersey pharmaceutical company said Feb. 28 that its earnings will be better in 2007 than expected.
Investors bid up Merck's shares 2.2% to $44.13 per share in early trading on the New York Stock Exchange on Feb. 28 -- in spite of jitters about the global economy following a dramatic plunge in equities the previous day.
Noting early trends in its sales, Merck said its first quarter earnings per share (EPS) will be between 63 cents and 67 cents. For all of 2007, the company thinks EPS will range between $2.55 and $2.65. The consensus had been for Merck to earn 60 cents during the first quarter and $2.62 per share during 2007.
Merck's forecasts exclude items like site closures and staff cuts; the company continues facing the threat of losing more than a billion from lawsuits related to fears that Vioxx, which had previously generated $2.5 billion a year for Merck, can trigger heart attacks.
But the drug giant has fought that setback and launched new vaccines in recent years, including Gardasil, which prevents some forms of human papilloma virus, a leading cause of cervical cancer (see BusinessWeek, 1/8/07, "Making Her Mark At Merck").
The company is boosting it efforts to find new winners. According to S&P Equity Research, Merck's R&D pipeline consisted of some 55 drugs and vaccines in clinical trials or under regulatory review as of December, 2006 -- a significant increase from 39 one year earlier. Drugs for heart disease, diabetes, obesity, Alzheimer's disease, and infections, as well as several antiviral vaccines are undergoing clinical trials.
In another majoir effort, the company is restructuring its operations to trim costs and boost efficiency. This plan includes the sale or closure of five plants and two preclinical sites and the elimination of 7,000 jobs by the end of 2008 (some 4,800 jobs were eliminated by the end of 2006). Merck hopes the effort will yield pretax savings of $4.5 billion to $5.0 billion from 2006 through 2010.
In another major effort, the company is restructuring its operations to trim costs and boost efficiency, selling or closing five plants and two other sites and eliminating 7,000 jobs by the end of 2008. Merck hopes the plan will yield pretax savings of $4.5 billion to $5.0 billion from 2006 through 2010.