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Merck profit slides as generics continue to bite

Singulair, Maxalt, Cozaar and Clarinex sales all affected

Merck & CoSecond-quarter net profit at Merck & Co was cut almost in half as it continues to struggle with generic competition to several older drugs and acquisition costs.

Merck posted net profit of $906m, down from $1.79bn a year earlier, on sales down 11 per cent to $11.01bn as generics ate into sales of asthma drug Singulair (montelukast), Maxalt (rizatriptan) for migraines, blood pressure treatment Cozaar (losartan) and antihistamine Clarinex (desloratadine).

Revenues fell short of analyst expectations but were hit by an unfavourable dollar exchange rate which impacted sales in overseas markets. Merck managed to do better with its bottom line, however, with earnings and margins better than forecast thanks to cost-cutting.

For example, R&D spending was down around $60m on the same quarter of last year as an operational review by recently-appointed R&D chief Roger Perlmutter starts to gain traction, with analysts predicting that savings could approach $150m over the full year.

Singulair led the revenue retreat with sales down 80 per cent $281m, offset by a 10 per cent gain for Merck's key diabetes franchise - Januvia (sitagliptin) and Janumet (sitagliptin plus metformin) - to $1.58bn in the quarter.

HIV drug Isentress (raltegravir) climbed 5 per cent to $410m, holding up fairly well despite increased competition from the likes of Gilead Sciences' elvitegravir, while sales of cholesterol drugs Zetia (ezetimibe) and Vytorin (ezetimibe and simvastatin) were up only marginally to $1.07bn, with gains for Zetia balancing Vytorin declines.

Merck is hoping to re-inject growth into the cholesterol franchise with the ongoing roll-out of Liptruzet (ezetimibe and atorvastatin) in the US. 

Meanwhile, immunology drugs Remicade (infliximab) and Simponi (golimumab) rose 2 per cent to $527m and 60 per cent to $120m, respectively, and human papillomavirus (HPV) vaccine Gardasil was up 19 per cent to $383m.

"With seven of our top 10 products growing in the second quarter and solid performance overall, we continue to navigate significant patent expiries and adapt to the evolving global healthcare environment," said Merck chief executive Kenneth Frazier.

However, hepatitis C virus treatment Victrelis (bocepravir) went into decline - after a flat performance in the first quarter - as doctors start to delay treatment of some patients in anticipation of a new generation of HCV medicines. Sales of the drug were down 5 per cent to $116m.

Merck is now expecting full-year revenues to be 5 to 6 per cent shy of last year's tally. In its first-quarter results it suggested the deficit would be around 3-4 per cent.

The company also needs some wins in its pipeline after a series of disappointments, including the recent knockback by the US FDA for insomnia candidate suvorexant.

31st July 2013

From: Sales

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