Merck & Co. on Tuesday posted a $1.63 billion loss in the fourth quarter as whopping charges, mainly for its Vioxx litigation settlement, dragged down results.
The maker of allergy and asthma pill Singulair and osteoporosis treatment Fosamax said the net loss amounted to 75 cents per share, compared with a year-ago profit of $473.9 million, or 22 cents per share.
The fourth-quarter charges totaled $3.4 billion, or $1.55 per share; that included a charge for Merck’s pending $4.85 billion settlement to end the bulk of lawsuits over Vioxx, the painkiller it pulled from the market in September 2004 because it increased risk of heart attack and stroke.
Other charges included $274 million for ongoing restructuring and $671 million for the anticipated resolution of federal and state civil probes into past sales and marketing practices; those were partly offset by a $455 million gain from an insurance arbitration reward related to coverage for the Vioxx litigation.
Excluding the one-time earnings, net income would have been 80 cents per share.
Analysts surveyed by Thomson Financial were expecting earnings of 74 cents per share and revenues of $6.3 billion. The estimates generally exclude one-time items.
Revenues totaled $6.24 billion, up 3 percent from $6.04 billion in 2006’s fourth quarter.
Sales jumped 20 percent for Singulair, to $1.15 billion, and rose 3 percent, to $891 million, for related blood pressure drugs Cozaar and Hyzaar. Sales edged up just 1 percent to $796 million for Fosamax, which loses patent protection on Feb. 6. Merck has an agreement with another company to produce an authorized generic version of Fosamax, but it has not disclosed any details about when the product will go on sale.
Merck said sales of cholesterol drugs Vytorin and Zetia totaled $1.5 billion in the fourth quarter, up 34 percent from a year earlier. Merck recorded $538 million of that as equity income. The company said it is monitoring the “potential financial impact” on that revenue from recent negative publicity about a study showing Vytorin was no more effective at limiting plaque buildup than one of its components, Zocor, which is now available as an inexpensive generic drug.
In addition, Merck said it knows of about 50 potential class action suits alleging consumer fraud in the marketing of Vytorin and Zetia.
Spending on research and development dropped 20 percent, to $1.38 billion.
Whitehouse Station-based Merck said it expects full-year 2008 earnings per share of $3.80 to $4, including one-time items. That’s down from its prior forecast, issued in early December, of $3.96 to $4.06, excluding items.
Excluding one-time items, the company expects 2008 earnings per share of $3.28 to $3.38, which matches its Dec. 4, 2007 forecast. Those items include a large gain related to Merck’s joint venture with AstraZeneca.
For the full year, net income totaled $3.28 billion, or $1.49 per share, down 26 percent from $4.43 billion, or $2.03 per share, in 2006. Revenues totaled $24.2 billion, down 7 percent from $22.6 billion in 2006.
“Our performance in 2007 shows that the customer-focused, more efficient business model we began implementing more than two years ago is working,” Chief Executive Officer Richard T. Clark said in a statement. “We have a strong portfolio of products, a robust pipeline of potential new therapies and a leadership team focused daily on improving operational performance.”