Drugmaker Merck posts 12% profit drop, beats forecasts

Drugmaker Merck on Tuesday posted a 12% drop in second-quarter profit, because of lower sales of its cholesterol drugs and several vaccines.

The company said the strong dollar was also a factor, lowering total revenue to $5.9 billion.

The maker of asthma and allergy treatment Singulair and cervical cancer vaccine Gardasil said net income fell to $1.56 billion, or 74 cents a share, from $1.77 billion, or 82 cents a share.

The company said it had restructuring charges and expenses related to its acquisition of Schering-Plough that totaled 9 cents a share. Without that, earnings per share would have been 83 cents.

Analysts polled by Thomson Reuters expected earnings per share of 77 cents and revenue of $5.84 billion.

Results were helped by a 10% decline in marketing and administrative expenses. Moreover, the drugmaker's effective tax rate, excluding special charges and merger-related costs, was 20.4%, a benefit of about 5 percentage points due to favorable tax settlements.

Merck stuck with its full-year 2009 profit forecast of $3.15 to $3.30 a share excluding special items, and its full-year revenue forecast of $23.2 billion to $23.7 billion.

At Schering-Plough sgp, profit jumped 49% in the second quarter, as the company recorded lower one-time costs.

Schering-Plough said it earned $633 million, or 38 cents a share, compared with $424 million, or 26 cents a share, in the same period a year ago. Excluding one-time items, its profit rose to 46 cents a share from 45 cents a share, beating analyst estimates by a penny per share.

Most of the one-time costs were related to Schering-Plough's buyout of Organon BioSciences in 2007.

The company's sales fell 6% to $4.65 billion, partly due to a stronger dollar. Analysts expected revenue of $4.64 billion. Total prescription revenue slid 3% to $3.6 billion, and animal health revenue fell 17% to $677 million primarily due to the global economic slump.

The company said its total sales rose 4% if changes in currency exchange rates are factored out, and prescription revenue rose 7% in constant currency.

Revenue from the allergy spray Nasonex grew 3% to $321 million. Sales of Temodar, a brain tumor drug, grew 2% to $256 million, and sales of hepatitis C drug Pegintron fell 6% to $215 million.

Sales of the rheumatoid arthritis drug Remicade rose 2% to $565 million, and sales of the cholesterol drugs Zetia and Vytorin fell 8% to $1 billion. The cholesterol drug sales are made through a joint venture with Merck, and are not recorded by Schering-Plough.

In March, Merck agreed to buy Schering-Plough for $41.1 billion. The combined company would be the second-largest drugmaker in the world by revenue.

The deal is expected to close in the fourth quarter, and the companies said they are cooperating to make the transaction smooth.