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Merck 2Q profit more than doubles

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A big one-time gain and a tax benefit helped drugmaker Merck & Co. more than double second-quarter profit, improve its profit forecast and top analysts’ expectations.

The maker of popular Type 2 diabetes pill Januvia said Tuesday that net income increased to $2 billion, or 68 cents per share, from $906 million, or 30 cents per share, in the same quarter a year earlier.

Merck, based in Whitehouse Station, New Jersey, said its earnings, adjusted for one-time gains and costs, were 85 cents per share. Analysts surveyed by Zacks Investment Research expected 81 cents.

Merck recorded a $741 million gain from AstraZeneca PLC, which exercised its option to buy out Merck’s interest in the British drugmaker’s heartburn drugs Nexium and Prilosec.

The world’s fourth-biggest drugmaker’s revenue fell 1 percent to $10.93 billion, still $220 million above Wall Street expectations.

CEO Kenneth Frazier said on a conference call that Merck favors smaller acquisitions – like its $3.85 billion purchase of hepatitis C treatment developer Idenix Pharmaceuticals Inc., expected to close this quarter – and is not looking for a deal enabling it to move its legal headquarters to a country with a lower tax rate.

That strategy, called inversion, is suddenly hot in corporate America. The U.S. has the world’s highest corporate tax rate, 35 percent, but pharmaceutical companies here generally pay well under 30 percent.

Chicago-based drugmaker AbbVie Inc. just reached a $55 billion deal to combine with British counterpart Shire PLC and incorporate in Britain.

BernsteinResearch analyst Dr. Timothy Anderson wrote to investors that Merck “will likely have another flattish year in 2014 in terms of financial performance but then growth should return more consistently.”

Merck noted it expects by early next year to launch two new drugs awaiting approval: long-delayed suvorexant for insomnia and pembrolizumab for advanced melanoma. The latter is part of the promising new class of drugs that stimulate the immune system to identify and attack cancer cells.

Meanwhile, Merck got U.S. approval in April for two tablets to gradually reduce grass and ragweed allergies, and in May for anticlotting drug Zontivity.

Sales of Merck’s prescription drugs fell 2 percent to $9.09 billion. Top sellers were Type 2 diabetes pills Januvia and Janumet, up 2 percent at $1.58 billion, and cholesterol medicines Zetia and Vytorin, up 6 percent to a combined $1.13 billion.

Merck’s consumer health segment had the biggest sales increase, up 19 percent to $583 million. In May, Merck agreed to sell that to Germany’s Bayer for $14.2 billion. It includes Claritin and the Coppertone sun-care line.

Merck said it expects full-year sales of $42.4 billion to $43.2 billion and profit of $3.43 to $3.53 per share, excluding one-time items. In January, it forecast $3.35 to $3.53.

In morning trading, Merck shares were up 72 cents at $58.69. They have increased 20 percent in the last 12 months.

Follow Linda A. Johnson at http://www.twitter.com/LindaJ-onPharma .

Merck 2Q profit more than doubles

KDWN

A big one-time gain and a tax benefit helped drugmaker Merck & Co. more than double second-quarter profit, improve its profit forecast and top analysts’ expectations.

The maker of popular Type 2 diabetes pill Januvia said Tuesday that net income increased to $2 billion, or 68 cents per share, from $906 million, or 30 cents per share, in the same quarter a year earlier.

Merck, based in Whitehouse Station, New Jersey, said its earnings, adjusted for one-time gains and costs, were 85 cents per share. Analysts surveyed by Zacks Investment Research expected 81 cents.

Merck recorded a $741 million gain from AstraZeneca PLC, which exercised its option to buy out Merck’s interest in the British drugmaker’s heartburn drugs Nexium and Prilosec.

The world’s fourth-biggest drugmaker’s revenue fell 1 percent to $10.93 billion, still $220 million above Wall Street expectations.

CEO Kenneth Frazier said on a conference call that Merck favors smaller acquisitions – like its $3.85 billion purchase of hepatitis C treatment developer Idenix Pharmaceuticals Inc., expected to close this quarter – and is not looking for a deal enabling it to move its legal headquarters to a country with a lower tax rate.

That strategy, called inversion, is suddenly hot in corporate America. The U.S. has the world’s highest corporate tax rate, 35 percent, but pharmaceutical companies here generally pay well under 30 percent.

Chicago-based drugmaker AbbVie Inc. just reached a $55 billion deal to combine with British counterpart Shire PLC and incorporate in Britain.

BernsteinResearch analyst Dr. Timothy Anderson wrote to investors that Merck “will likely have another flattish year in 2014 in terms of financial performance but then growth should return more consistently.”

Merck noted it expects by early next year to launch two new drugs awaiting approval: long-delayed suvorexant for insomnia and pembrolizumab for advanced melanoma. The latter is part of the promising new class of drugs that stimulate the immune system to identify and attack cancer cells.

Meanwhile, Merck got U.S. approval in April for two tablets to gradually reduce grass and ragweed allergies, and in May for anticlotting drug Zontivity.

Sales of Merck’s prescription drugs fell 2 percent to $9.09 billion. Top sellers were Type 2 diabetes pills Januvia and Janumet, up 2 percent at $1.58 billion, and cholesterol medicines Zetia and Vytorin, up 6 percent to a combined $1.13 billion.

Merck’s consumer health segment had the biggest sales increase, up 19 percent to $583 million. In May, Merck agreed to sell that to Germany’s Bayer for $14.2 billion. It includes Claritin and the Coppertone sun-care line.

Merck said it expects full-year sales of $42.4 billion to $43.2 billion and profit of $3.43 to $3.53 per share, excluding one-time items. In January, it forecast $3.35 to $3.53.

In morning trading, Merck shares were up 72 cents at $58.69. They have increased 20 percent in the last 12 months.

Follow Linda A. Johnson at http://www.twitter.com/LindaJ-onPharma .

Merck 2Q profit more than doubles

KDWN

A big one-time gain and a tax benefit helped drugmaker Merck & Co. more than double its second-quarter profit, raise the lower end of its profit forecast and easily top analysts’ expectations.

The maker of popular Type 2 diabetes pill Januvia and cholesterol medicines Vytorin and Zetia said Tuesday that net income increased to $2 billion, or 68 cents per share, from $906 million, or 30 cents per share, in the same quarter a year earlier.

Merck, based in Whitehouse Station, New Jersey, said its earnings, adjusted for one-time gains and costs, were 85 cents per share. The average per-share estimate of analysts surveyed by Zacks Investment Research was for profit of 81 cents.

Merck recorded a gain of $741 million from AstraZeneca PLC, its longtime partner in marketing the British drugmaker’s heartburn drugs Nexium and Prilosec. AstraZeneca exercised its option to buy out Merck’s interest in the drugs.

The world’s fourth-biggest drugmaker reported revenue of $10.93 billion, down 1 percent from $11.01 billion a year ago. That edged past Wall Street expectations of $10.71 billion, according to Zacks.

Sales of Merck’s prescription drugs totaled $9.09 billion, down 2 percent as cheaper generic competition cut into sales of some older medicines and sales of its hepatitis C drugs was hurt by new brand-name competition. Sales were led by Type 2 diabetes pills Januvia and Janumet, up 2 percent at $1.58 billion, and Zetia and Vytorin, up 6 percent to a combined $1.13 billion.

Sales of veterinary medicines edged up 2 percent to $872 million. Merck’s smallest segment, consumer health products, had the best performance, up 19 percent to $583 million. In May, Merck agreed to sell that to Germany’s Bayer for $14.2 billion. It includes Claritin, the Coppertone sun-care line, Dr. Scholl’s foot-care products and MiraLAX laxative.

Merck has said it would use the money to invest in business areas with the highest growth potential and beef up its drug pipeline with “external assets.” The deal is expected to close in the second half of 2014.

Merck said it expects profit for 2014 of $3.43 to $3.53 per share, excluding one-time items. In January, it forecast earnings of $3.35 to $3.53. It also forecast full-year sales $42.4 billion to $43.2 billion, assuming current exchange rates.

“We delivered a strong first half of the year, making progress in transforming our operating model, fueling innovation and managing costs,” CEO Kenneth Frazier said in a statement.

In premarket trading, Merck shares were down 18 cents at $57.97. Merck shares have increased $9.63, or 20 percent, in the last 12 months.

Merck 2Q profit more than doubles

KDWN

WHITEHOUSE STATION, N.J. (AP) — Merck & Co. (MRK) on Tuesday reported earnings that more than doubled in its second quarter, and topped analysts’ expectations.

The Whitehouse Station, New Jersey-based company said net income increased to $2 billion, or 68 cents per share, from $906 million, or 30 cents per share, in the same quarter a year earlier.

Earnings, adjusted for one-time gains and costs, were 85 cents per share. The average per-share estimate of analysts surveyed by Zacks Investment Research was for profit of 81 cents.

The company reported revenue of $10.93 billion compared with $11.01 billion in the same quarter a year ago, and beat Wall Street forecasts. Analysts expected $10.71 billion, according to Zacks.

Merck shares have increased $7.92, or 16 percent, to $57.97 since the beginning of the year, while the Standard & Poor’s 500 index has increased 7.1 percent. The stock has climbed $9.63, or 20 percent, in the last 12 months.

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This story was generated automatically by Automated Insights (http://automatedinsights.com/ap ) using data from Zacks Investment Research. Full MRK report: http://www.zacks.com/ap/MRK

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Keywords:Merck,Earnings Report