UPDATE 2-Merck's Januvia, animal health products slump; shares off
Oct 28 (Reuters) - Merck & Co Inc reported better-than-expected third-quarter earnings on Monday thanks to cost cutting, but lower sales of its Januvia diabetes treatment added fresh evidence its biggest product was losing ground to newer drugs.
Moreover, sales of Merck's animal health products, which typically prop up results, fell 2.6 percent in the third quarter, hurt by the recent decision to suspend sales of its Zilmax weight-gain feed supplement amid concern it was causing lameness in cattle.
Merck shares fell 2.2 percent in premarket trading.
Global sales of Januvia fell 5 percent in the quarter to $927 million. Combined sales of the pill and a related drug called Janumet fell 1 percent to $1.4 billion, versus 5 percent growth in the prior quarter, and marked a return to declines in the first quarter.
"It looks like Januvia might be plateauing," said Morningstar analyst Damien Conover, adding the trend could continue to put pressure on Merck's profits as it strives to develop new medicines.
The company earned $1.12 billion, or 38 cents per share, in the third quarter, compared with $1.73 billion, or 56 cents per share, in the year-earlier period.
Excluding special items, Merck earned 92 cents per share. Analysts, on average, expected 88 cents per share, according to Thomson Reuters I/B/E/S.
Merck spokeswoman Kelley Dougherty said the better-than-expected earnings was largely due to efforts to manage costs across the board. She said research and development spending was lower in part because costly late-stage trials of some medicines had been delayed until the fourth quarter.
Company sales fell 4 percent to $11.03 billion, below Wall Street estimates of $11.12 billion. They would have fallen 2 percent if not for the stronger dollar, which lowers the value of sales in overseas markets.
Merck expects full-year earnings of $3.48 to $3.52 per share, excluding special items. Early this month, it forecast $3.45 to $3.55 per share.
Merck shares traded at $45.35 premarket, down from a Friday close of $46.54 on the New York Stock Exchange.