Merck earnings plunge on Vioxx troubles

/ Source: The Associated Press

Pharmaceutical giant Merck & Co. said Tuesday its fourth-quarter profit plunged 21 percent, mainly due to lost sales and a big reserve taken for legal defense costs over the withdrawal of its former blockbuster arthritis drug Vioxx.

Merck, one of the world's top five drug companies, has seen its fortunes sink since its Sept. 30 decision to pull its No. 2 drug from the market worldwide because its own testing showed long-term use increased risk of heart attack and stroke.

The Whitehouse Station-based company said net income for the October-December quarter was $1.1 billion, or 50 cents per share, which matched the consensus forecast of analysts surveyed by Thompson First Call. A year earlier, net income was $1.4 billion, or 62 cents per share.

Total revenues rose just 2 percent, to $5.75 billion from $5.63 billion a year earlier. However, the company said it lost $700 million to $750 million in sales for the quarter due to the Vioxx withdrawal. Vioxx had about $2.5 billion in annual sales before the withdrawal.

In addition, marketing and administrative expenses jumped 29 percent due to a $604 million reserve taken for future Vioxx defense costs and $16 million set aside for restructuring costs. A year earlier, the company reserved $195 million for restructuring costs.

For the full year, net income was down 15 percent, to $5.81 billion, or $2.61 per share, from $6.83 billion, or $2.92 per share.

Revenues for all of 2004 totaled $22.94 billion, up 2 percent from $22.49 billion in 2003.