WHITEHOUSE STATION, N.J. (AP) — Major cost cuts enabled drugmaker Merck & Co. to offset lower first-quarter sales as generic competition continues to hurt sales of former blockbuster medicines. Merck's profit rose 7 percent, trouncing Wall Street expectations.
Merck said it plans to rely on its pipeline of experimental drugs for future sales. That would make it an exception to the trend among many other drugmakers, which are pursuing big acquisitions to keep sales growing.
The maker of the diabetes pill Januvia said Tuesday that net income was $1.71 billion, or 57 cents per share, up from $1.59 billion, or 52 cents per share, a year earlier.
Excluding $896 million in restructuring and acquisition charges, net income was $2.6 billion, or 88 cents per share — 9 cents better than analysts expected.
In mid-afternoon trading, Merck's shares rose $1.71, or 3 percent, to $58.40.
Revenue totaled $10.26 billion, down 4 percent and just below the $10.44 billion analysts expected.
Pharmaceutical sales dropped 5 percent, to $8.45 billion, as cheaper generic copycat pills hammered several off-patent drugs that once brought in billions each year: asthma and allergy pill Singulair, allergy spray Nasonex and blood pressure drugs Cozaar and Hyzaar.
Merck's top sellers, Type 2 diabetes pills Januvia and Janumet, brought in a combined $1.33 billion, up 3 percent. Sales jumped 10 percent to $604 million for immune disorder drug Remicade, and also rose for HIV drug Isentress and several other products.
Lower sales of nonprescription Claritin allergy pills dragged down consumer health sales 4 percent to $454 million. Sales of veterinary medicines declined 3 percent to $813 million.
Analysts were surprised by the level of cost cuts: 8 percent for administration and marketing expenses and 17 percent for research spending as new research head Roger Perlmutter continues to cut Merck's least-promising programs. Merck, based in Whitehouse Station, N.J., reduced its global workforce by 2,000 in the quarter, to 74,000.
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