Merck & Co issues profit warning

Merck & Co has surprised analysts by forecasting flat earnings for 2002as a result of patent expiries and slower-than-expected sales growth for its two best-selling drugs, the arthritis therapy Vioxx (rofecoxib) and the lipid-lowerer Zocor (simvastatin). The company has also cut its 2001 earnings estimate to $3.12-$3.18 per share, from its forecast just two months ago of $3.15-$3.25 per share. Analysts polled by Thomson Financial/First Call had expected 2002 earnings per share to be around the $3.40 mark.

Patent expiries will hit profits hard

For 2002, Merck said it expects Zocor's sales to reach $7.4 billion, reflecting 6%-14% growth over the drug's expected 2001 revenues, but well down on the 23%-26% increase for this year over 2000. Turnover from Vioxx and its follow-up drug Arcoxia (etoricoxib) should be in the $2.8-$3.1 billion range in 2002, though sales of the former alone are forecast to reach $2.7 billion this year. In terms of patent expiry, generic competition will start hitting Prinivil (lisinopril) from July 2002, and Merck will also lose its share of revenues from AstraZeneca's Losec/Prilosec (omeprazole).