Merck Revenue and Profit Falls -- Update
February 03 2016 - 1:08PM
Dow Jones News
By Austen Hufford and Peter Loftus
Merck & Co. posted declines in sales and profit as the
pharmaceutical giant gave revenue projections below analyst
forecasts and earnings expectations on the lower end of them.
Merck shares, which have fallen 11% in the last three months,
fell 2.9% to $48.95 in midday trading Wednesday.
Merck said it expects 2016 adjusted earnings per share of
between $3.60 and $3.75 and revenue between $38.7 billion and $40.2
billion. Analysts polled by Thomson Reuters had expected earnings
of $3.72 a share on revenue of $40.25 billion.
One contributor to 2016 sales will be Zepatier, a new treatment
for hepatitis C that was approved last week by the U.S. Food and
Drug Administration. The market for hepatitis C drugs is now
dominated by Gilead Sciences Inc., but Merck hopes to gain ground
partly by competing on price.
Merck set a list price for Zepatier of $54,600 a patient for a
12-week treatment, more than 30% below the list prices for
competing drugs from Gilead and AbbVie Inc., though in line with
net prices for those drugs after discounts, according to Merck.
Merck said it expects the price for Zepatier to maximize its
revenue and market share, and to broaden patients' access to
hepatitis C treatment. The list price could reduce out-of-pocket
expenses for certain patients, such as those covered by the
Medicare Part D drug benefit, versus competing drugs, Adam
Schechter, Merck's head of human health, said on a conference
call.
Mr. Schechter didn't rule out providing discounts on Zepatier,
saying Merck planned to "compete in all segments of the market and
to have an appropriate discounting strategy that allows us to have
access." He didn't specify the magnitude of any discounts.
Bernstein analyst Tim Anderson said in a research note Wednesday he
believes Merck is offering a 15% discount off the list price to
payers.
The quarter's pharmaceutical revenue fell 3.7% to $9.03 billion,
including an 8% negative impact from currency fluctuations.
Combined sales of Type 2 diabetes treatments Januvia and Janumet
declined 12%. Type 2 diabetes treatment Januvia posted a 12% sales
decrease. Recently, Januvia has faced an FDA safety alert about
risk of joint pain for it and other drugs in its category. Merck
said the decrease was expected and driven by the timing of
purchases.
HPV vaccine Gardasil sales increased 40% due to an increase in
government purchases in the U.S.
Sales of Remicade, a treatment for inflammatory diseases,
decreased 29% due to loss of exclusivity and the accelerating
impact of competition by biosimilar drugs.
In January, the U.S. Food and Drug Administration approved
Merck's new treatment, Zepatier, for hepatitis C, the latest
entrant in a booming market for drugs for the viral infection--a
market now dominated by Gilead Sciences Inc.
Overall, the company posted a profit of $976 million, or 35
cents a share, down 87% from $7.32 billion, or $2.54 a share, a
year prior.
The previous quarter's earnings included proceeds from the sale
of Merck's over-the-counter business to Bayer AG for $14.2 billion.
Excluding that and other items, earnings were 93 cents, up from 87
cents. Sales slipped 2.5% to $10.22 billion.
Analysts forecast per-share earnings of 91 cents a share on
revenue of $10.35 billion.
Write to Austen Hufford at austen.hufford@wsj.com and Peter
Loftus at peter.loftus@wsj.com
(END) Dow Jones Newswires
February 03, 2016 12:53 ET (17:53 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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