A big one-time gain and a tax benefit helped drugmaker Merck & Co. more than double second-quarter profit, improve its profit forecast and top analysts' expectations.
The maker of popular Type 2 diabetes pill Januvia said Tuesday that net income increased to $2 billion, or 68 cents per share, from $906 million, or 30 cents per share, in the same quarter a year earlier.
Merck, based in Whitehouse Station, New Jersey, said its earnings, adjusted for one-time gains and costs, were 85 cents per share. Analysts surveyed by Zacks Investment Research expected 81 cents.
Merck recorded a $741 million gain from AstraZeneca PLC, which exercised its option to buy out Merck's interest in the British drugmaker's heartburn drugs Nexium and Prilosec.
The world's fourth-biggest drugmaker's revenue fell 1 percent to $10.93 billion, still $220 million above Wall Street expectations.
CEO Kenneth Frazier said on a conference call that Merck favors smaller acquisitions — like its $3.85 billion purchase of hepatitis C treatment developer Idenix Pharmaceuticals Inc., expected to close this quarter — and is not looking for a deal enabling it to move its legal headquarters to a country with a lower tax rate.
That strategy, called inversion, is suddenly hot in corporate America. The U.S. has the world's highest corporate tax rate, 35 percent, but pharmaceutical companies here generally pay well under 30 percent.
Chicago-based drugmaker AbbVie Inc. just reached a $55 billion deal to combine with British counterpart Shire PLC and incorporate in Britain.
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