Drugmaker Merck & Co. reported an 11 percent jump in first-quarter profit Thursday despite flat sales, as results were buoyed by higher interest income and revenues from its cholesterol-drug joint venture. Meanwhile, the number of lawsuits filed over its withdrawn painkiller Vioxx has climbed past 11,000.
The maker of blockbusters Fosamax for osteoporosis and Zocor for high cholesterol said net income totaled $1.52 billion, or 69 cents per share, up from $1.37 billion, or 62 cents per share, a year earlier.
Whitehouse Station-based Merck said it eliminated about 1,800 jobs during the first quarter and 1,100 in the prior quarter as part of a global restructuring announced late last year.
“We are well on our way to our target of eliminating 7,000 positions by 2008,” Chief Executive Officer Richard T. Clark told analysts during a morning conference call.
Excluding a charge of 9 cents per share for job cuts and facilities closures, first-quarter earnings per share would have been 78 cents. Analysts surveyed by Thomson Financial were expecting 72 cents, including the cost of stock options granted to employees, an expense corporations now must deduct.
Merck said first-quarter stock options totaled $99 million, or about 3 cents per share, and it expects to give about $120 million more over the rest of the year.
Revenues edged up less than 1 percent, from $5.36 billion to $5.41 billion, $60 million less than analysts expected. Sales of Merck’s No. 2 drug, Singulair for asthma and allergies, rose 9 percent to $801 million, while sales of Fosamax and the related blood pressure drugs Cozaar and Hyzaar dipped 2 percent.
Sales of top drug Zocor fell 4 percent to $1.06 billion, mainly because it now has generic competition in some foreign countries. Zocor loses U.S. patent protection in June, after which sales are expected to plummet.
Merck has been trying to switch patients to Zetia and Vytorin, the newer cholesterol drugs it sells through its joint venture with Schering-Plough Corp. Their combined sales were up 55 percent to $793 million, and Merck’s equity income from that and other partnerships rose 59 percent to $503 million.
Clark said the company is making progress on the strategic plan he outlined in December to make Merck an industry leader again, with higher net income and an improved pipeline of new drugs. Merck has fallen from the world’s No. 3 to No. 7 drugmaker by revenues over about a decade.
In February, the Food and Drug Administration approved Merck’s RotaTeq vaccine against a common gastrointestinal virus that can kill children. Gardasil, its vaccine to prevent cervical cancer, is getting an expedited FDA review.
“We have five drugs in late-stage development for diabetes, insomnia, high cholesterol, heart disease and HIV/AIDS,” Clark added.
In its quarterly update on Vioxx litigation, Merck reported that as of March 31 it had been named in 11,500 suits that include about 23,350 plaintiff groups; about half the suits are filed in New Jersey and the other half are set to be handled in coordinated federal litigation. Merck said it also faces about 190 potential class action lawsuits, and it has entered agreements with about 4,450 other claimants suspending the statute of limitations for them to file lawsuits.
Of the cases tried so far, Merck has won three and lost two. It has said it will appeal the awards from the two losses: $13.5 million in a New Jersey case and $253.4 million in a Texas case, an amount that will be cut to about $26 million under Texas cap on punitive damages.
Merck raised its earnings-per-share forecast for all of 2006 by 4 cents, to $2.32 to $2.40 for the full year, excluding 25 cents to 30 cents in restructuring costs. Analysts were expecting $2.36.
For the second quarter, Merck said it expects earnings per share of 62 cents to 66 cents, excluding several cents in restructuring charges; analysts were expecting 62 cents.