Please login to the form below

Not currently logged in
Email:
Password:

Merck cuts outlook as Q1 sales fall

But new R&D chief highlights potential of company's near-term pipeline

Merck and Co - US headquartersMerck & Co joined its peer Pfizer in cutting its financial guidance for 2013 after reporting lower-than-expected first quarter revenues.

Sales fell 9 per cent to $10.7bn in the quarter, largely thanks to a dramatic drop-off for asthma blockbuster Singulair (montelukast), which was down 75 per cent year-on-year to $337m as generic competition hit in the US and Europe.

More worryingly, Merck's Januvia (sitagliptin) product franchise failed to live up to expectations, with sales down 4 per cent to $884m mainly resulting from lower turnover in the US, according to chief executive Kenneth Frazier.

"Our results for the first quarter underscore the challenges of managing through a major patent expiration and the impact of headwinds which were even tougher than we had anticipated," he said on a conference call, while insisting that growth opportunities for Januvia remain strong despite increasing competition in the marketplace and pricing pressure.

On the plus side, HIV drug Isentress (raltegravir) gained 8 per cent to $360m and cervical cancer vaccine Gardasil added 30 per cent to reach $390m.

There was also good news from the company's arthritis therapies Remicade (infliximab) and Simponi (golimumab), which grew 10 per cent collectively, with Remicade up 6 per cent to $549m and Simponi breaking the $100m barrier for the first time. 

During the quarter Merck's net income largely held up - at $1.6bn versus $1.7bn year ago - but the result was flattered by charges totalling some $1.6bn in the same period of 2012.

All told, the figures prompted the company to issue new revenue forecasts that would see it come in at 3-4 per cent below 2012 levels rather than the previously anticipated flat year-on-year performance. The revised figures would put earnings per share in the £3.45-$3.55 range compared to its previous estimate of $3.60-$3.70.

Also in line with Pfizer, Merck has announced a major $15bn share repurchase programme to stabilise its stock and placate investors who have started to grumble about R&D productivity and commercial performance. Around $7.5bn of the buyback will take place in the next 12 months, said Frazier.

The first-quarter call also featured new R&D chief Roger Perlmutter, who officially took over from Peter Kim on April 15 in the wake of some high-profile pipeline disappointments including the failure of cholesterol drug Tredaptive (extended-release niacin/laropiprant). 

Perlmutter highlighted the potential of Merck's near-term pipeline - including insomnia drug suvorexant and neuromuscular blocker sugammadex - as well as key pipeline assets such as cancer antibody lambrolizumab (MK-3475) which was recently awarded breakthrough status by the US FDA, and the recent alliance with Pfizer on diabetes candidate ertugliflozin.

Perlmutter would not be drawn yet on the details of a promised revamp of Merck's R&D operations, which comes at a time when some investors have been calling for a reduction in spending to bring the company closer in line with its peers in big pharma – and, importantly, for it to also make more efficient use of resources.

"I am doing a very detailed review of programmes, of process and people and already two weeks in, I can say there is some opportunities for acceleration and for productivity enhancement," he said. Meantime, however, Merck's R&D spend looks set to increase in 2013 over 2012.

2nd May 2013

From: Research, Sales

Share

Tags

Featured jobs

Subscribe to our email news alerts

PMHub

Add my company
VCCP Health

We’re the challenger agency for challenger brands. Brands with a point to prove. Rx, OTC and wellness brands run by...

Latest intelligence

Report: Achieving launch excellence in the challenging healthcare markets of today
Our in-depth report is based on original data and expert interviews, which coupled with our own experience, ensures we give you the best recommendations for achieving launch success in challenging...
What is blockchain and why should i care - Richard Springham
Four Health - Emerging Technologies The power of blockchain lies in the fact it can prove that a unique event occurred at a certain time with out the need to...
NHS medicines optimisation milestone
Steve How, Paul Midgley and Oli Hudson, of the Wilmington Healthcare Consulting Team, explore the implications of Adalimumab’s recent European patent expiry...

Infographics