Merck Profit Beats, Income Drops on Costs, Charges

Merck on Friday reported a 52 percent drop in second-quarter net income, due to big merger and restructuring charges and lower income from partnerships.

Merck,

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[MRK  Loading...      ()   ] the world's second-biggest drug company by revenue, says its net income amounted to $752.4 million, or 24 cents per share. That's down from $1.56 billion, or 74 cents a share, in 2009's second quarter.

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Excluding a host of one-time items, income would have been $2.71 billion, or 86 cents a share. That beat the forecast of analysts, who were expecting 83 cents a share, excluding one-time items, on revenue of $11.45 billion.

The charges, including $1.7 billion in asset write-downs and $830 million in merger-related restructuring costs, amounted to an after-tax decrease in net income totaling $1.96 billion, or 62 cents per share.

"Our strong bottom-line performance in the second quarter demonstrates Merck's continued success in executing our post-merger strategy," Chief Executive Richard T. Clark said in a statement. "Already we're seeing positive signs of what can be achieved -- despite patent (expirations) and a challenging economy."

Revenue nearly doubled to $11.35 billion, entirely due to a huge acquisition that brought a host of new prescription drugs and consumer and animal health products. Merck, based in Whitehouse Station, N.J, bought New Jersey neighbor Schering-Plough Corp. in November for $41 billion, gaining businesses in biologic drugs and consumer health, as well as a strong pipeline of drugs in development.

Prescription drugs sales totaled $9.78 billion in the quarter, down 2 percent from the combined revenue of the two companies a year earlier. Sales were led by allergy and asthma drug Singulair, at $1.26 billion, and Remicade, for rheumatoid arthritis and other immune disorders, at $669 million.

The animal health division had sales of $731 million. The consumer business, which makes nonprescription Claritin and Dr. Scholl's products, posted $422 million in sales.

Looking ahead, Merck forecast full-year net income of 82 cents to $1.16 per share, or $3.29 to $3.39 excluding items. Analysts expect $3.37 per share, on average.

For the first six months, net income totaled $1.05 billion, or 33 cents per share. That was down 65 percent from $2.98 billion, or $1.41 per share, in the first half of 2009.

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