Merck & Co.'s second-quarter profit rose 12 percent on increased demand for the cervical-cancer vaccine Gardasil and other new drugs. The company raised its forecast, sending the shares up 6.8 percent, the most in three months.
Net income rose to $1.68 billion, or 77 cents a share, from $1.5 billion, or 69 cents, a year earlier, Merck said today in a statement. Excluding restructuring costs, the Whitehouse Station, New Jersey-based company earned 82 cents a share, beating the average 72-cent estimate of 16 analysts surveyed by Bloomberg.
Revenue climbed 5.9 percent to $6.1 billion. Sales of the cholesterol drugs Vytorin and Zetia, shared with Schering-Plough Corp., bolstered profit. New products including Gardasil helped Chief Executive Officer Richard T. Clark revive growth after the loss of patent protection last year for Merck's former top- selling medicine, the cholesterol pill Zocor.
``Things are real positive for Merck, and the momentum hasn't decelerated,'' said Les Funtleyder, an analyst with Miller Tabak & Co. in New York, in a telephone interview. ``The new products certainly helped, and restructuring helped on the bottom line. It's hard to point to exactly the strength, other than strength everywhere.''
Shares of Merck jumped $3.31, to $52.33, in New York Stock Exchange composite trading. The last time the shares rose more in a day was on April 13, when they increased 8.3 percent after the company reported that first-quarter profit beat estimates.
Increased Forecast
The shares gained 40 percent in the past 12 months, making Merck the third-best performer in the 14-member Standard & Poor's 500 Pharmaceutical Index, behind Schering-Plough Corp. and Watson Pharmaceuticals Inc.
Based on increased demand for new products including the diabetes medication Januvia, Merck raised its 2007 earnings forecast by more than 7 percent to $2.80 to $2.95 a share, compared with the average $2.87 estimate of 13 analysts in a Bloomberg survey. Last year, Merck earned $4.4 billion, or $2.03 a share.
``New products continue to gain momentum and acceptance in the marketplace,'' Clark said during a conference call with investors and analysts. ``Our future success clearly depends on discovering, developing and marketing novel medicines.''
Vytorin
Sales of Vytorin gained 38 percent to $686 million, even as prescriptions surged for generic Zocor, also called simvastatin. Prescriptions for simvastatin have increased 90 percent in the past 12 months, according to Verispan LLC, a market-research company in Yardley, Pennsylvania. Sales of Zetia rose 21 percent to $578 million.
Schering-Plough, based in Kenilworth, New Jersey, reported that second-quarter profit more than doubled on higher sales of Vytorin and Zetia. The drugs, sold through a joint venture of the two companies, benefited from a $128 million advertising campaign.
Zocor sales plunged to $178 million from $990 million a year earlier.
Gardasil, introduced a year ago, had sales of $358 million. Some analysts predict revenue from the cervical-cancer vaccine will reach $1.5 billion this year.
``It's a very good period for Merck and it is quite sustainable,'' said Kris Jenner, a fund manager for T. Rowe Price in Baltimore, in an interview. ``They are in the early stages of very important product launches.''
Lobbying Campaign
In February, Merck stopped lobbying state officials to require that girls receive Gardasil before they attend school after the American Academy of Pediatrics raised concerns about public acceptance and state funding to pay for the $360 vaccine.
Gardasil is designed to prevent infection with the sexually transmitted human papillomavirus, or HPV, that cause cervical cancer. The vaccine is now approved for funding through the federal Vaccines for Children program in all 50 states, Merck said on July 16. About 40 percent of U.S. children get their vaccines through the program, according to the Centers for Disease Control and Prevention
Merck's Januvia, which came on the market in October 2006, had sales of $144 million, up from $87 million in the first quarter. Januvia has been gaining prescriptions amid setbacks for rival makers of diabetes pills, including GlaxoSmithKline Plc's Avandia, linked to increased heart attacks, and a delay in U.S. approval for Novartis AG's Galvus.
Sales of Janumet, a new diabetes medication that won U.S. marketing approval in March, were $24 million. The new drug combines Januvia with metformin, an older diabetes medicine.
Vioxx Litigation
Januvia is the first from a new class of diabetes drugs that enhance the body's mechanisms for regulating blood sugar.
Sales of the asthma medication Singulair, Merck's top- selling product since the loss of its Zocor patents, increased 15 percent to $1.1 billion.
Merck said earnings were reduced by $210 million because of an increase to $810 million in legal reserves for lawsuits over Vioxx. Merck withdrew the drug in 2004 after a company study showing the increased health risks. The company said it has been named a defendant in 26,950 lawsuits over the product.
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