Merck Profit Rises More Than Estimated on Cost Cuts
Th entrance to Merck headquarters in Whitehouse Station, New Jersey. Photographer: Emile Wamsteker/Bloomberg
July 30 (Bloomberg) -- John Sullivan, managing director at Leerink Swann LLC, talks about Merck & Co.'s second-quarter profit reported today. The second-largest U.S. drugmaker said earnings, excluding one-time items, were 86 cents a share, beating analyst estimates. Sullivan, speaking with Jon Erlichman on Bloomberg Television's "InsideTrack," also discusses the outlook for the health-care industry. (Source: Bloomberg)
Merck & Co., the second-largest U.S. drugmaker, reported quarterly profit that rose more than analysts estimated as reduced costs helped overcome lower-than- expected sales.
Earnings, excluding one-time items, were 86 cents a share, beating the 83 cent average estimate of 15 analysts surveyed by Bloomberg. Net income fell 52 percent to $752.4 million from acquisition-related costs, the Whitehouse Station, New Jersey- based company said today in a statement.
Revenue more than doubled to $11.3 billion with the addition of products from the acquisition last year of Schering- Plough Corp. falling short of analyst estimates by $70 million. Merck said it has cut 7,000 jobs since the $49.6 billion purchase was completed in November -- almost half of the 15,000 positions that are planned for elimination to help trim $3.5 billion in annual costs by 2012.
“The biggest lever that companies like Merck have available to them in order to improve earnings is cost- cutting,” said John Sullivan, a managing director of health care research at Leerink Swann & Co. in an interview with Bloomberg TV.
Merck fell 60 cents, or 1.7 percent, to $34.46 at 4 p.m. in New York Stock Exchange composite trading. It had gained 17 percent in the past 12 months before today.
Merck said 2010 earnings probably will be $3.29 to $3.39 a share, excluding one-time items. The company previously forecast earnings of $3.27 to $3.41.
Merck has been shifting focus to outside the U.S. and Europe where there are less pricing pressures from governments and health insurers. The company said it added 1,000 people to its sales force in China over the past year, giving it 5,000 sales representatives there. Merck started construction on a 37,000-square-foot manufacturing plant this month in Hangzhou, China that will start making products for the Chinese market in two years.
To contact the reporter responsible for this story: Shannon Pettypiece at spettypiece@bloomberg.net.
Rate These Stories
Rate this Page