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Merck posts Q4 loss due to restructuring charges
WHITEHOUSE, STATION, N.J. (AP) - Drugmaker Merck & Co. said Thursday it lost $531 million in the fourth quarter due to nearly $4 billion charges, including writeoffs and restructuring costs from its acquisition of Schering-Plough Corp. in 2009.
Almost half of the charges were to account for diminished prospects for anti-clotting drug vorapaxar, which had been seen as a potential blockbuster. The company announced last month it would halt late-stage testing on the drug for safety reasons.
Merck also issued an earnings forecast for 2011 that was lower than Wall Street expectations and withdrew its long-term forecast. It cited pricing pressures from U.S. health care reform and cuts in European government health programs, as well the decision to halt the study of vorapaxar because of dangerous increased bleeding in the brains of patients who'd had strokes.
In early trading, Merck shares dropped $1.18, or 3.5 percent, to $32.64.
The world's second-biggest drugmaker behind Pfizer Inc. said the fourth quarter net loss amounted to 17 cents per share. A year earlier, Merck earned $6.49 billion, or $2.35 per share.
The restructuring and other charges amounted to $1.05 per share, or $3.95 billion before taxes. Excluding the charges, Merck would have made 88 cents per share.
Schering's products helped boost revenue 20 percent, to $12.1 billion from $10.1 billion. The results beat Wall Street forecasts.
Analysts surveyed by FactSet forecast earnings per share of 83 cents and sales of $11.55 billion.
The maker of asthma and allergy drug Singulair said it expects 2011 earnings per share of $3.64 to $3.76, excluding about $1.50 worth of one-time items. Analysts were looking for $3.81 a share, according to FactSet.
Merck bought Schering in November 2009 for $49 billion, gaining its strong pipeline, consumer and animal health products and a biologic drug business.
The company says it is on track to reach its target of $3.5 billion in annual savings related to the merger by the end of 2012.
Strong sales growth continued for several key drugs, including Singulair, diabetes drugs Januvia and Janumet, HIV drug Isentress and Remicade for rheumatoid arthritis and other immune disorders.
"These results clearly demonstrate the benefits of the post-merger Merck with our broader product portfolio, robust late-stage pipeline and expanded global footprint," new CEO Kenneth Frazier said in a statement.
Frazier, a lawyer who had headed Merck's global pharmaceutical business, took over Jan. 1 from Richard Clark, who is retiring but remains chairman of the board for now.
For all of 2010, Merck reported net income of $861 million, or 28 cents per share. That's down 93 percent from $12.9 billion,or $5.65 per share, in 2009. Revenue rose 68 percent with the addition of Schering-Plough's products, to $45.99 billion.
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