Merck & Co, which is in the process of acquiring US rival Schering-Plough in a $4.1 billion deal, moved a step closer to finalizing the transaction with European Commission approval coming through on October 22. On the same day, Merck announced that that its third-quarter 2009 net income more than tripled to $3.4 billion, compared with $1.1 billion in the prior-year period, due mainly to a one-time gain from the sale of its interest in animal health care company Merial to partner Sanofi-Aventis, a competition authority condition for the S-P merger. This beat by 8 cents the average estimate of 13 analysts surveyed by Bloomberg. Total quarterly revenue rose 2% to $6 billion, meeting consensus expectations.
Based on the strong third quarter results, management raised its full-year earnings guidance to $3.20-$3.30 per share. The full-year revenue guidance of $23.2 billion-$23.7 billion was reaffirmed. This excludes any contribution from the proposed merger with S-P.
Mixed product performance
Weaker-than-expected sales of Merck's cervical cancer vaccine Gardasil were offset by significantly stronger-than-anticipated Singulair (montelukast sodium) revenues. Although the US Food and Drug Administration has asked for additional precautions regarding the risks associated with the use of Merck's lead product Singulair (as well as other leukotriene inhibitors), including suicide and depression, the drug recorded an increase of 5% to $1.1 billion, compared to the third quarter of 2008.
Gardasil, Merck's cervical cancer vaccine, recorded yet another quarter of lower sales at 311 million, down 22% from the year-ago period. Recently, the vaccine received FDA approval to be used in boys and young men in the age group of nine-26 years for the prevention of genital warts (The Pharma Letter October 19). However, sales are likely to be hampered as the FDA approval of GlaxoSmithKline's cervical cancer vaccine, Cervarix, will intensify competition further, comment analysts at Zacks Equity Research.
Turnover of the cholesterol-lowering franchise, consisting of Vytorin (ezetimibe/simvastatin) and Zetia (ezetimibe) under Merck's partnership with S-P, continued to decline in the reported quarter as well. While sales were down 7% to $1.0 billion year-on-year in the third quarter, in the second quarter, they were down 10%. Isentress (raltegravir), the company's product for HIV infection recorded an increase of 84% to $197 million. The drug is expected to record increased sales with the recent FDA and European Union approval for its use in previously untreated patients as well.
Merck's antihypertensives, Cozaar (losartan) and Hyzaar (losartan and hydrochlorothiazide), posted a 3% decline to $861 million. Sales from these two drugs are going to decline significantly going forward as they will lose market exclusivity in the USA and some of the major European markets during the first half of 2010, the Zacks analysts note.
The diabetes franchise, consisting of Januvia (sitagliptin), and Janumet (sitagliptin/metformin) recorded a robust performance during the quarter compared to the year ago period. While Januvia sales grew 30% to $491 million, Janumet leapt 72% to $173 million. Going forward, the Zacks team expects Januvia to record higher sales as the drug received approval in Japan recently for the treatment of type-2 diabetes.
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Chairman, Sanofi Aventis UK
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