Merck Posts Lower Revenue and Profit -- 2nd Update
February 03 2016 - 04:13PM
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 9.5% in the last three months,
fell 1% to $49.89 in recent trading.
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 has 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.
Another new drug that Merck hopes will become a big seller is
Keytruda, a treatment for melanoma and lung cancer. The drug had
fourth-quarter sales of $214 million, versus $50 million a year
earlier.
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%. Merck said the decrease was expected and driven by
the timing of purchases. Recently, Januvia has faced an FDA safety
alert about risk of joint pain for it and other drugs in its
category.
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.
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 earlier.
Earnings for the year-ago quarter included proceeds from the
sale of Merck's over-the-counter business to Bayer AG for $14.2
billion. Excluding that and other items, per-share earnings were 93
cents, up from 87 cents. Sales slipped 2.5% to $10.22 billion.
Analysts had 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 15:58 ET (20:58 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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