Merck merger costs halve profits

Shares in Merck & Co fell as costs relating to the merger with Schering-Plough put a huge dent in second quarter profits.

The company saw sales of $11.3 billion between April and June, with income of $752 million – down from $1.56 billion in the same period last year.

The 52% drop in profit is largely down to costs following 2009’s merger, which cost Merck $894 million in this year’s second quarter, although taking on Schering-Plough’s operations meant sales were up 92%.

“Our strong bottom-line performance in the second quarter demonstrates Merck’s continued success in executing our post-merger strategy,” insisted Richard Clark, Merck’s chief executive.

“We’re now halfway through our first full year as a combined company. Already we’re seeing positive signs of what can be achieved – despite patent expiries and a challenging economy.”

For the first six months of 2010, worldwide sales were $22.8bn and net income was $1bn.

Clark identified Januvia, Janumet and Isentress as among the key performers. Between them diabetes drugs Januvia (sitagliptin) and Janumet (sitagliptin/metformin hydrochloride) had sales of $818m during the second quarter of 2010 – up 33% year on year.

HIV brand Isentress (raltegravir) was up 55% with worldwide sales of $267m.

But sales of former blockbuster osteoporosis drug Fosamax fell 13% after losing its patent last year and sales of the Cozaar/Hyzaar hypertension franchise were down 46% as generic competition begins to bite.

Merck last year admitted it was expecting a “significant decline in future sales” of these and other ageing brands.

“With our strong performance for the first half of the year, we continue to have confidence in delivering on our long-term financial targets,” Clark said.

The company expects 2010’s revenue to be between $45.4 billion and $46.1 billion – a slight decrease from previous forecasts of up to $46.4 billion.

Adam Hill