Merck & Co Q3 Earnings Beat Estimates (MRK)
Pharmaceutical company, Merck & Co Inc. (NYSE: MRK) ended marginally lower on Friday even as it announced better than expected fiscal third-quarter earnings; nevertheless, revenue fell short of Street’s expectations as sales suffered owing to expiration of patent on its blockbuster medicine , Singulair.
Lately, many other pharmaceutical companies have also witnessed significant reduction in top-line figures as low priced generic drugs captured the bigger chunk of the market-share. In the case of Merck, its number one drug Singular, used for allergy and asthma, lost its patent protection in August for the U.S. market. As a result, sales of this drug fell by 55% to $602 million in the fiscal third quarter. The drug will also lose its patent protection in some of the major European markets from February 2013.
However, the dip in sales was offset by stronger sales of some of its other products, including diabetes drug Januvia and cervical-cancer vaccine Gardasil. Besides, lighter-than-expected tax rates and lower operating costs helped boosting net profits.
In order to counter growing competition from generic drug market, Merck launched cost cutting program several years ago. The company now is now developing many new precuts to tackle sales decline arising out of patent expiration.
“We continue to believe we have the right strategy in place for the long term while at the same time setting high expectations for ourselves next year.” said Kenneth Frazier while addressing analysts in a conference call.
For the fiscal third quarter, Merck reported net profit of $1.73 billion, or 56 cents a share, compared with $1.69 billion, or 55 cents a share, in the year earlier quarter. After excluding acquisition and restructuring costs and other items in both periods, earnings jumped to 95 cents a share compared to 94 cents in the corresponding period of last year. Sales contracted 4% to $11.49 billion.
Analysts polled by Thomson Reuters had forecasted earnings of 92 cents a share (excluding restricting and onetime expenses) on revenue of $11.57 billion.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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