Drug developer Merck & Co. said Monday its second-quarter profit jumped nearly 12 percent on an across-the-board rise in drug sales, and the company boosted earnings guidance for the year.
However, it took another charge to cover costs of its massive Vioxx litigation.
Whitehouse Station, N.J.-based Merck earned $1.68 billion, or 77 cents per share, compared with a net income of $1.5 billion, or 69 cents per share, during the same period a year prior. Revenue rose 6 percent to $6.11 billion from $5.77 billion.
Analysts polled by Thomson Financial expected profit of 72 cents per share on revenue of $5.77 billion.
Merck shares jumped $2.83, nearly 6 percent, to $51.85 at the open of trading Monday.
Sales of the company's top seller, asthma treatment Singulair, rose 15 percent to $1.1 billion, but osteoporosis treatment Fosamax saw sales dip 4 percent to $786 million. Sales of hypertension drugs Cozaar and Hyzaar rose 8 percent to $847 million, and sales of Gardasil, a new vaccine to prevent cervical cancer, hit $358 million.
Sales of Zetia and Vytorin, the cholesterol drugs it markets jointly with partner Schering-Plough Corp., rose 30 percent to $1.3 billion; Merck's equity income from that venture totaled $465 million. Sales of Merck's older cholesterol drug Zocor, which got generic competition last summer, plunged 82 percent to $178 million.
Merck said it took a charge of $210 million to boost to $810 million its legal reserve for defending against lawsuits over Vioxx, the former blockbuster painkiller it pulled from the market on Sept. 30, 2004 after research showed it doubled risk of heart attacks and strokes. The company said it spent $137 million on the litigation in the second quarter.
The reserve is expected to cover legal costs through 2008.
The number of pending personal injury lawsuits against Merck over Vioxx declined slightly for the second straight quarter, to about 26,950 lawsuits; those include about 45,225 plaintiff groups. Merck said that as of June 30, the claims of more than 4,620 plaintiff groups have been dismissed, although about three-quarters of them could be refiled later.
Meanwhile, the number of agreements Merck has with potential claimants allowing them to sue after their statute of limitation expires rose from 13,700 at the end of March to 14,450 as of June 30.
Merck raised its full-year guidance, excluding restructuring and layoff charges, to between $3 and $3.10 per share from the previous estimate of $2.75 to $2.85 per share. Including charges, the company expects profit between $2.80 and $2.95 per share.
For the first six months, net income was $3.4 billion, or $1.55 per share, up 12 percent from $3 billion or $1.38 per share in the first half of 2006. Revenues increased 6 percent, to $11.9 billion from $11.2 billion.