Merck KGaA, the maker of the cancer drug Erbitux, fell the most in more than a month after reporting an unexpected drop in second-quarter sales.
Merck dropped 2.3 percent to close at 123.25 euros in Frankfurt, the biggest decline since June 28. The stock has returned 25 percent this year, outpacing the 20 percent return for the Bloomberg Europe Pharmaceutical Index.
Merck is cutting jobs and looking to license and acquire medicines as sales of Erbitux fall and its multiple sclerosis drug Rebif faces competition from newer therapies. Revenue, which includes drug royalty payments, fell 0.4 percent to 2.84 billion euros, the Darmstadt, Germany-based company said in a statement today. The figure was below the 2.86 billion-euro average estimate of 11 analysts surveyed by Bloomberg.
“When the cost-cutting story runs out of momentum you rely on top-line growth, which there isn’t much evidence of,” Alistair Campbell, an analyst with Berenberg Bank, said in an interview.
Merck has a target of saving 385 million euros a year by 2018 and plans to expand outside Europe, particularly in the U.S., Japan and China.
Earnings before interest, taxes, depreciation and amortization excluding one-time items increased 11 percent to 826.4 million euros ($1.1 billion) from 746.6 million euros a year earlier. The figure exceeded the 825.8 million-euro average estimate of 11 analysts surveyed by Bloomberg.
The company said it still expects Ebitda excluding certain items this year of 3.1 billion euros to 3.2 billion euros. Merck, which isn’t related to Merck & Co. of the U.S., forecast earnings per share excluding some items of 8.50 euros to 9 euros with sales of 10.7 billion euros to 10.9 billion euros.
Revenue from Rebif, Merck’s biggest-selling product, increased 3.5 percent to 499 million euros, the third straight quarter of slowing growth. Erbitux revenue declined 4.8 percent to 215 million euros as negative currency effects outstripped growth of 0.5 percent.
Consumer-health product revenue declined 4.5 percent to 116 million euros. Sales at the Performance Materials unit, which makes liquid crystals for flat-panel television screens as well as ingredients and pigments for cosmetics and food, rose 1.2 percent to 431 million euros. Sales at Merck Millipore, which manufactures lab equipment and filtration systems, grew 2.6 percent to 666 million euros.
Merck has narrowed its research to focus on cancer, immune disorders, multiple sclerosis and fertility treatments. In June the company announced it would establish a new immuno-oncology platform to develop cancer vaccines, stem-cell therapies and immunotherapies.
The company has previously said it would explore large acquisitions once its restructuring is complete though probably not before 2014.