- Revenue dropped 1.2%; analysts predicted an increase of 1%
- Earnings beat estimates on cost-cutting, Keytruda sales
Merck & Co.’s first-quarter revenue fell short of analysts’ estimates, extending a four-year decline as sales of older drugs like Remicade disappointed.
Revenue slipped 1.2 percent to $9.31 billion, the Kenilworth, New Jersey-based drugmaker said Thursday in a statement, while analysts anticipated a gain of 1 percent. The drugmaker still raised and narrowed its earnings and revenue forecast for 2016 after first-quarter earnings came in higher than analysts anticipated, helped by newly introduced drugs such as the cancer treatment Keytruda, which posted solid gains.
The company is relying on growth from new drugs like Keytruda and hepatitis C treatment Zepatier to help revive sales, while attempting to defend its top-selling diabetes drug Januvia, which could face increasing competition from a rival product that reduces the risk of heart complications.
The shares fell 1.9 percent to $53.79 at 11:12 a.m. in New York.
It’s the first quarter of sales for the company’s hepatitis C drug Zepatier, which was approved by the U.S. Food and Drug Administration in January and brought in $50 million in the quarter, just below analysts’ expectations for $51.7 million. Merck priced the drug 42 percent lower than Gilead Sciences Inc.’s Harvoni in an effort to win customers.
The hepatitis C field has been divided between Gilead and AbbVie Inc., which have locked up exclusive deals with the leading drug-benefit managers for U.S. health insurance plans by offering their own discounts on list prices. Both companies also noted that Merck’s Zepatier launch disrupted their hepatitis C drug sales in the first quarter.
Sales of Keytruda, a drug that harnesses the immune system to fight cancer, tripled to $249 million, topping estimates of $230 million. Merck has been competing with Bristol-Myers Squibb Co. in the fields of skin and lung cancer. Bristol’s drug Opdivo, which also is approved in kidney cancer, has pulled ahead recently.
Key financial metrics for the quarter:
- Profit excluding some items was 89 cents a share, beating the 85-cent average of estimates compiled by Bloomberg.
- Net income rose to $1.13 billion, or 40 cents a share, from $953 million, or 33 cents, a year earlier.
- Marketing and administrative costs dropped 11 percent to $2.32 billion, while research and development expenses fell 4.5 percent to $1.66 billion.
- Sales of Januvia, the company’s top drug, totaled $906 million; analysts had estimated $891 million.
- Sales of cholesterol drug Zetia were $612 million, topping estimates for $582.4 million. Sales of HPV vaccine Gardasil totaled $378 million, beating expectations for $374.6 million. Arthritis drug Remicade’s sales were $349 million, falling short of expectations for $379.5 million.