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Merck & Co shares fall on Q4 results, osteoporosis drug delay

Sales down on loss of patent protection for Singulair

Merck & Co faced further financial difficulties during the fourth quarter of 2012 in the wake of asthma drug Singular losing patent protection, with net income down 6 per cent to $1.6bn on revenues down 5 per cent to $11.7bn.

Investors reacted negatively to the company's year-end presentation on Friday, likely because of concerns about the strength of the company's R&D pipeline, and Merck's shares ended the day down more than 3 per cent to $41.83.

Singulair (montelukast) lost patent protection in the US in August, and generic competition bit deep into the product's sales in the fourth quarter, driving them down 67 per cent to $480m.

The performance of the product dragged down overall prescription drug revenue at the company by 6 per cent to $10.1bn in the quarter, while annual prescription revenues fell 2 per cent to $40.6bn.

On the plus side, diabetes treatment Januvia (sitagliptin) had a buoyant quarter, up 18 per cent to $1.1bn on the back of growth in the US and Japan, while cholesterol drug Zetia (ezetimibe) climbed 6 per cent to $676m.

Remicade (infliximab) for arthritis came in at $549m in the quarter, a rise of 8 per cent, but was down 22 per cent for 2012 as a whole to $2.1bn.

Cervical cancer vaccine Gardasil raced ahead with a 61 per cent increase in sales to $442m on the back of strong demand in the US, Japan and emerging markets, particularly China.

Questioning by analysts on Merck's results call focused a lot on the company's pipeline, and particularly the prospects for osteoporosis candidate odanacatib, which has been delayed while an undisclosed safety signal is being explored.

The company had said it intended to file odanacatib on the basis of a pivotal trial but now says it plans to wait for additional data from an extension study, and Merck has delayed filing from the first half of 2013 to 2014.

There are also concerns that Merck is behind its rivals in bringing an all-oral, non-interferon hepatitis C regimen to market based on drug such as protease inhibitor MK5172 and NS5A inhibitor MK8742.

Merck's most promising near-term pipeline candidate is suvorexant for insomnia which was filed for approval last year and could be a first-in-class therapy for the 30 per cent or so of people who experience sleep problems.

The company highlighted its anti-PD1 agent MK3475 for melanoma, which seems to be a little way behind rival candidate BMS-936558 from Bristol-Myers Squibb, as well as an anti-Il23 drug for psoriasis which is moving into phase III and a BACE inhibitor for Alzheimer's disease that has just started phase II/III testing.

CEO Kenneth Frazier remarked: "Looking forward to this year, we expect that our underlying operating momentum will allow us to continue to maintain our full year 2013 revenues near 2012 levels on a constant currency basis."

4th February 2013

From: Sales

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