MRK Merck and Co Inc

By Austen Hufford 

Merck & Co. posted a revenue decline in its latest quarter as generic competition hurt results, though the top line was still better than expectations.

Shares rose 1.5% in premarket trading.

Pharmaceutical revenue for the fourth quarter decreased 1.4% to $8.9 billion, driven by the loss of U.S. market exclusivity for skin-infection treatment Cubicin, allergy treatment Nasonex and cholesterol drug Zeita. The company continues to face biosimilar competition for Remicade, a treatment for inflammatory diseases.

The declines were nearly offset by growth in oncology, hepatitis C, diabetes and vaccines.

The drugmaker also released its guidance for the year. For 2017, Merck projects per-share adjusted earnings between $3.72 and $3.87 on revenue between $38.6 billion and $40.1 billion. Analysts polled by Thomson Reuters expect annual earnings per share of $3.85 on revenue of $40.04 billion.

Cancer drug Keytruda posted sales of $483 million in the most recent quarter, compared with $214 million in the same quarter last year.

In October, the drug received U.S. Food and Drug Administration approval as a first-line treatment for certain lung cancer patients, a big-win for the drug as it had typically been used as a secondary-treatment.

Merck is continuing to develop and launch the drug for different types of cancers, and its development program has included more than 30 tumor types and 360 clinical trials. The quarter also took a $625 million charge to settle patent litigation related to the drug.

Research and development costs decreased 4.3% to $1.72 billion.

In all for the quarter, the company posted a profit of $1.18 billion, or 42 cents a share, up from $976 million, or 35 cents a share, a year prior. Excluding restructuring and acquisition-related costs and other items, per-share earnings fell to 89 cents from 93 cents.

Profit rose as the company cut costs and from income tax differences in the quarters.

Sales fell 1% to $10.12 billion. Analysts polled by Thomson Reuters had forecast per-share earnings of 89 cents a share on revenue of $10.22 billion.

Last year, the FDA 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. Zepatier had sales of $229 million, compared with $164 million in the third quarter and $112 million in the second quarter.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

February 02, 2017 08:02 ET (13:02 GMT)

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