Merck Swings to Loss on Vioxx Charges, Shares Fall
Merck on Wednesday reported a fourth-quarter loss due to charges from a costly settlement related to its withdrawn Vioxx arthritis drug, but results soundly beat Wall Street forecasts and lifted its shares 2 percent.
Merck said it lost $1.63 billion, or 75 cents per share. That compared with a profit of $474 million, or 22 cents per share, in the year-earlier period when Merck took two significant special charges.
Excluding special items, Merck said it earned 80 cents per share. Analysts on average expected 73 cents per share, according to a poll by Reuters Estimates.
The items included the $4.85 billion Vioxx charge and combined charges of $945 million related to restructuring and government civil investigations.
The Vioxx settlement offer, announced in November, calls for $4 billion to be divided among former users of Vioxx who allege it caused them to have heart attacks, and $850 million for those who suffered strokes. More than 57,000 plaintiffs have registered to participate in the settlement.
Company sales rose 3 percent to $6.24 billion, in line with the Reuters Estimates forecast of $6.28 billion.
Combined sales of Vytorin and Zetia, the cholesterol fighters sold in a joint venture with Schering-Plough , grew 34 percent to $1.5 billion. The drugs tallied $5.2 billion in sales for 2007.
Merck shares have slumped some 20 percent since a controversial study earlier this month found that Vytorin failed to prevent the buildup of fatty plaque in the carotid artery better than a widely used generic, simvastatin. Vytorin combines Zetia with simvastatin.
Merck said it has become aware of or has been served with about 50 civil class-action lawsuits since mid-January alleging consumer fraud in connection with the promotion of Vytorin and Zetia.
Vytorin prescriptions have fallen amid the torrent of negative publicity about the disappointing trial data, even as Merck girds for U.S. generic competition beginning next week for its blockbuster osteoporosis drug Fosamax.
Sales of the Fosamax franchise rose 1 percent to $796 million in the fourth quarter. For 2007, Fosamax totaled $3 billion, but Merck expects sales to plunge to as low as $1.1 billion this year.
But booming sales of new Merck products for diabetes and to prevent cervical cancer are expected to help offset the blow.
Merck shares rose 2.1 percent to $49 in early premarket trading on the New York Stock Exchange from Tuesday's close of $48.01