WHITEHOUSE, N.J., Fri Apr 27, 2012 – Merck & Co. reported quarterly earnings slightly above Wall Street forecasts, helped by cost controls, but revenue trailed expectations on generic competition and reduced proceeds from a joint venture with British drugmaker AstraZeneca Plc.
The No. 2 U.S. drugmaker on Friday said global revenue rose 1 percent to $11.73 billion, compared with Wall Street expectations of $11.82 billion. Revenue would have risen 2 percent if not for the stronger dollar, which hurts the value of sales in overseas markets.
Sales of the asthma treatment Singulair, whose U.S. patent lapses in August, edged 1 percent higher to $1.34 billion in the quarter. That marks a slowdown for Merck’s biggest product, whose sales jumped 8 percent in the prior quarter.
Singulair could lose half or more of its sales soon after cheaper generics arrive. But the company has a lineup of promising medicines in clinical trials that it hopes will be approved, and help fill the revenue gap.
They include a new type of insomnia treatment called suvorexant, osteoporosis treatment odanacatib and two drugs that have been delayed by regulators: Bridion, to reverse the effects of anesthesia, and Tredaptive, a form of niacin meant to raise “good” HDL cholesterol without causing facial flushing.
“Beyond earnings, we continue to believe Merck’s late-stage pipeline updates in 2012 and 2013 represent key drivers for the stock,” JP Morgan analyst Chris Schott said in a research note, referring to expected progress reports on the drugs.
Schott said Merck could generate compound annual earnings growth of 7 percent through 2017, the highest gains of any major drug company he covers. Even so, he said Merck shares are trading at only 10 times the company’s expected 2012 per-share earnings, a discount to most rival large drugmakers.