WHITEHOUSE STATION, N.J. - Drugmaker Merck & Co. (MRK) said Tuesday double-digit sales growth for a half-dozen of its top medicines fueled a 7 percent jump in first-quarter sales. But charges for its November deal to buy Schering-Plough Corp. pulled profit down sharply.
Despite that, Merck handily beat analyst expectations.
The maker of asthma and allergy pill Singulair and cholesterol drugs Vytorin and Zetia is reporting earnings of $298.8 million, or just 9 cents per share.
A year earlier, before Merck's megadeal to buy Schering-Plough for $41 billion, Merck reported a profit in its of $1.43 billion, or 67 cents per share, on revenue of $5.39 billion.
The new Schering products added $5.4 billion to sales, so revenue more than doubled to $11.42 billion compared to Merck's stand-alone sales in the first quarter of last year. Sales in the just-ended quarter also were boosted 4 percent by favorable currency exchange rates.
Excluding charges totaling $2.31 billion or 74 cents worth after taxes, Merck would have earned 83 cents a share. Analysts surveyed by Thomson Reuters expected, on average, earnings per share of 75 cents and revenue of $11.18 billion.
The company said it is still on track to reach its goal of $3.85 billion in annual savings from the Schering-Plough deal in 2012.
"The first full quarter of results for the new Merck reflect our strong focus on driving revenue growth, maintaining the momentum of the business and reducing our cost structure," Chief Executive Richard T. Clark said in a statement. "At the same time, we made excellent progress on achieving our integration goals."
The company said it expects earnings per share this year of $1.15 to $1.50, including roughly $2 per share in one-time charges, and 2010 revenue of about $46 billion. Excluding the items, income is pegged at $3.27 to $3.41 per share.
Analysts expect earnings per share of $3.41 and revenue of $45.83 billion, on average. The estimates usually exclude one-time items.
Merck previously reported that the U.S. health care overhaul, which required increased rebates to the government for drugs bought through the Medicaid program, will reduce its revenue by about $170 million this year and $300 million to $350 million next year - less than some rivals have been reporting. During the first quarter, it took a charge of $146.5 million for elimination of a tax credit for retiree health plan benefits, also part of the health overhaul.
Merck's prescription drugs business brought in $9.79 billion. Its animal health business posted $709 million in revenue and the consumer products unit, which had been part of Schering-Plough, had sales of $379 million.
In premarket trading, Merck shares changed hands at $35.38, up 11 cents from Monday's close.
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