Merck Beats Estimates on Sales of Diabetes Products

  • Company seeing switching in competitive diabetes drug class
  • Cancer drug Keytruda is leading treatment for melanoma in U.S.

Merck & Co. beat expectations of third-quarter profit as sales of its top drugs, diabetes treatments Januvia and Janumet, surpassed analysts’ estimates, even after a study showed a rival product reduced the risk of cardiac events.

Adjusted earnings of 96 cents a share beat the average analyst estimate of 92 cents. Revenue fell 4.6 percent to $10.1 billion, matching the average projection of analysts.

Merck’s position as the dominant seller of pills in the $63 billion diabetes market came into question in August when rival Eli Lilly & Co. showed that its drug, Jardiance, significantly reduced the risk for heart attack, stroke and death from heart disease in high-risk patients. The study results were a first for any drug for diabetics, and it addresses a critical health issue for those patients. While the Jardiance data has yet to be cleared by regulators for use in the drug’s marketing, the new results could make Eli Lilly’s treatment the go-to drug for doctors.

It hasn’t happened so far. The combined Januvia and Janumet franchise sold $1.58 billion in the quarter, compared with expectations for $1.51 billion of sales. Janumet is a combination of Januvia and the popular generic diabetes drug metformin. Eli Lilly executives said last week that new Jardiance prescriptions are increasing, even before promoting the new study with doctors.

Earnings were boosted by $100 million of sales from Januvia that came from customers stocking up on the drug, Merck said. That revenue won’t appear in the following quarters, it said.

The company raised its 2015 forecast for the third time this year. Profit will be $3.55 to $3.60 a share, up from a prior range of $3.45 to $3.55 a share, on an adjusted basis, Merck said.

The shares rose less than 1 percent to $53.02 at 9:32 a.m. in New York.

Immune Therapy

Other drugs’ results were mixed. Cholesterol therapies Zetia and Vytorin sold a combined $936 million, compared with estimates for $945 million. HPV vaccine Gardasil had $625 million in revenue, compared with the average analyst expectation of $606 million.

Merck’s new immune-therapy cancer drug Keytruda generated $160 million in revenue, compared with the average estimate of $142.7 million of sales. That drug is projected by analysts to be a $3 billion blockbuster by 2018, based on the expectation that it will be used in a wide range of cancers. It is currently approved for use in patients with skin and lung cancer.

Merck executives said the drug is the top product for patients with melanoma in the U.S., attracting 70 percent of patients taking that class of immune-therapy cancer drugs.

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