Merck Profit Beats Second-Quarter Estimates, Target Raised

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Merck & Co. raised its full-year profit guidance and reported second-quarter earnings that beat estimates despite falling sales of some top drugs.

Profit excluding one-time items was 86 cents a share, the Kenilworth, New Jersey-based company said in a statement, beating the 81-cent average of analysts’ estimates compiled by Bloomberg. Merck raised its full-year adjusted earnings target to $3.45 to $3.55 a share, from $3.35 to $3.48 a share.

Merck is near the front of a hotly contested race to bring to market new cancer therapies that use the body’s immune system to fight tumors. Its drug Keytruda, which is approved for the treatment of skin cancer and is awaiting approval for use in lung cancer, sold $110 million in the second quarter. Analysts had foreseen $100 million.

Merck also announced the acquisition of cCAM Biotherapeutics Ltd. for $95 million, plus as much as $510 million in additional payments. The company is developing cancer treatments.

The drugmaker is also working on a hepatitis C treatment that could compete with therapies for sale from Gilead Sciences Inc. and AbbVie Inc. Merck plans to focus on hard-to-treat cases of the liver infection, rather than competing on price. The drugmaker said Tuesday that the Food and Drug Administration had accepted its application for the drug, which is a combination of the medications grazoprevir and elbasvir.

Total revenue fell 11 percent to $9.79 billion, as sales of the company’s drugs declined and were hurt by foreign exchange rates, which cut revenue by 7 percent.

Drug Sales

The diabetes treatment Januvia, Merck’s top-selling product, fell 1 percent to $1.04 billion, above the $1.02 billion average of analysts’ estimates.

Remicade, a rheumatoid arthritis injection, saw sales fall 25 percent to $455 million. The company attributed the biosimilar’s decline to the loss of exclusivity in Europe.

Cubicin, the antibiotic Merck brought in with its $8.4 billion purchase of Cubist Pharmaceuticals Inc. in January, had sales of $293 million. Analysts had predicted $273 million.

Second-quarter net income fell to $687 million, or 24 cents a share, from $2 billion, or 68 cents a share, a year earlier. Part of the decrease comes from Merck’s sale of its consumer business to Bayer AG for $14.2 billion last year.

Merck’s animal health business, which makes drugs for pets and livestock, saw sales fall 4 percent to $840 million. Merck said on a conference call with investors Tuesday it wants to build up the unit.

Merck shares fell 1.3 percent to $56.25 at 9:54 a.m. in New York. The stock has declined 1.7 percent in the last 12 months as of Monday’s close, making it the second-worst performer on the Standard & Poor’s 500 Pharmaceutical Index of 13 companies.

(An earlier version of this story corrected the approved uses of Merck’s drug Keytruda.)

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