Merck & Co. reported third-quarter profit that beat analyst estimates as sales of its diabetes treatments helped offset losses from generic competition.
Earnings, excluding one-time items, were 95 cents a share, topping by 2 cents the average of 17 analyst estimates compiled by Bloomberg. Net income increased 2 percent to $1.73 billion, or 56 cents a share, from $1.69 billion, or 55 cents, a year earlier, the Whitehouse Station, New Jersey-based company said today in a statement.
Sales fell 4 percent to $11.5 billion, slightly below analyst estimates. Merck made up for the drop in sales by cutting costs, including a lower-than-expected tax rate. The drugmaker has been eliminating thousands of jobs and trying to boost demand of existing products to overcome the revenue drop from Singulair, which began facing competition from cheaper copies in August.
“Merck missed on the top line a bit, but most of the miss was Singulair, which is now off patent in the U.S. and will be in the EU soon so we think most investors will look through this,” said Mark Schoenebaum, an analyst with ISI Group in New York, in a note today to clients.
Merck fell less than 1 percent to $46.15 at 4 p.m. New York time. The shares have gained 38 percent in the past 12 months.
Merck said it expects 2012 earnings excluding one-time items of $3.78 to $3.82, narrowing its previous forecast of $3.75 to $3.85.
Sales of the diabetes drug Januvia increased 15 percent to $975 million and sales of Janumet, which combines Januvia with an older diabetes drug, grew 16 percent to $405 million.
Those gains helped offset a 55 percent drop in sales of Singulair, which were $602 million. Merck also saw a decline in sales for the cholesterol drug Vytorin, which fell 10 percent to $423 million.
Merck said sales in emerging markets accounted for about 20 percent of its pharmaceutical revenue, led by a 19 percent increase in China. Drug sales were reduced by 5 percent because of unfavorable foreign exchange rates, the company said.
The company said it plans to seek U.S. regulatory approval by the end of 2013 for its insomnia drug suvorexant, its osteoporosis treatment odanacatib, and cholesterol drug tredaptive.