Drugmaker Merck & Co. on Friday posted a 34 percent drop in third-quarter net income due to flat sales, restructuring costs and higher overhead, including increased marketing costs for recently approved products.
The struggling pharmaceutical company also said it was adding an additional $598 million to its reserves for future legal defense costs over its withdrawn painkiller Vioxx.
Merck had previously reserved a total of $970 million for Vioxx defense costs since pulling the one-time blockbuster from the market on Sept. 30, 2004.
Its shares were down 13 cents at $44.36 in premarket trading.
Merck, the maker of osteoporosis treatment Fosamax as well as Singulair for asthma and allergies, reported net income of $941 million, or 43 cents per share. A year earlier, it had net income of $1.42 billion, or 65 cents per share.
Excluding a charge of $249.2 million, or 8 cents per share, for restructuring costs such as site closures and severance, net income would have equaled 51 cents per share.
Revenue totaled $5.41 billion, little changed from the $5.42 billion in 2005’s third quarter.
The profits beat by a penny the consensus forecast of analysts surveyed by Thomson Financial, who were expecting earnings per share of 50 cents, excluding one-time items. They projected revenue at $4.97 billion.
Merck said it eliminated about 500 jobs in the third quarter, for a total of about 3,900 job cuts since it announced a massive restructuring last fall. The company plans to cut 7,000 jobs in all by the end of 2008.
Merck raised its full-year profit’s forecast to $2.18 to $2.25 per share including restructuring charges, or $2.48 to $2.52 per share excluding charges.
That’s up from its July forecast of $2.10 to $2.24 per share, or $2.40 to $2.48 excluding charges. Analysts are expecting $2.48 per share excluding charges.
For the first nine months of 2006, net income was $3.96 billion, or $1.81 per share, up nearly 13 percent from $3.51 billion, or $1.59 per share, for the first nine months of last year. Revenue totaled $16.6 billion, up 2 percent from $16.2 billion a year earlier.