(RTTNews.com) - Healthcare giant Merck & Co., Inc. ( MRK ), known as MSD outside the U.S. and Canada, on Wednesday reported a 14 percent decline in profit for the fourth quarter from last year, reflecting lower sales due to the impact of patent expiries, and higher one-time costs.
However, adjusted earnings matched analysts' expectations, while revenues missed their estimates. Looking ahead to fiscal 2014, the company forecast earnings in-line with Street estimates, but projects revenues below their expectations.
In a separate statement, Merck said it has signed three separate clinical collaboration agreements, through subsidiaries, with drugmakers Amgen Inc. ( AMGN ), Incyte Corp. ( INCY ) and Pfizer Inc. ( PFE ) to evaluate novel combination regimens with MK-3475, Merck's investigational immunotherapy cancer treatment. Financial terms of the deals were not disclosed.
For the fourth quarter, net income attributable to Merck declined to $781 million or $0.26 per share from $908 million or $0.30 per share in the previous-year quarter. The latest quarter's results include acquisition-related costs of $1.35 billion and restructuring costs of $962 million.
Excluding these items, adjusted earnings for the latest quarter were $0.88 per share, compared to $0.83 per share in the same period last year. On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.88 per share for the quarter. Analysts' estimates typically exclude special items.
Worldwide sales for the quarter declined 4 percent to $11.32 billion from $11.74 billion a year ago and missed analysts' consensus revenue estimate of $11.36 billion.
The decline in sales reflects unfavorable impact of patent expiries and a 3 percent negative impact from foreign exchange.
Pharmaceutical sales for the quarter declined 3 percent from the year-ago period to $9.76 billion and includes a 3 percent negative impact due to foreign exchange. Sales of Singulair, Maxalt and Temodar fell following loss of market exclusivity.
Worldwide sales of Singulair, for chronic treatment of asthma and relief of symptoms of allergic rhinitis, dropped 38 percent to $298 million in the quarter.
The patents for Singulair expired in the U.S. in August 2012, and in major European markets in February 2013. The company has experienced a significant and rapid reduction in sales in these markets.
Sales of diabetes drug Januvia for the quarter were $1.12 billion, a decrease of 1 percent from last year. HPV vaccine Gardasil sales declined 11 percent to $394 million.
Meanwhile, cholesterol drug Zetia's sales rose 6 percent to $716 million, and anti-inflamatory drug Remicade showed sales growth of 13 percent to $620 million.
Emerging market sales, which accounted for about 21 percent of pharmaceutical sales in the quarter, grew 2 percent from last year and includes a 6 percent negative impact from foreign exchange.
Global sales of Animal Health products declined 3 percent to $871 million, and includes a 2 percent negative impact due to foreign exchange. Sales of Consumer Care products decreased 1 percent to $390 million.
For fiscal 2013, Merck's net income was $4.40 billion or $1.47 per share, down from $6.17 billion or $2.00 per share last year. Adjusted earnings for the year were $3.49 per share, compared to $3.82 per share in the prior year.
Worldwide net sales for the year declined 7 percent to $44.03 billion from $47.27 billion in the previous year.
Street expected the company to report earnings of $3.50 per share for the year on revenues of $44.15 billion.
Looking ahead to fiscal 2014, Merck forecast reported earnings in a range of $2.15 to $2.47 per share, and adjusted earnings of $3.35 to $3.53 per share.
The company projects revenues for the year between $42.4 billion and $43.2 billion. This includes the expectation that AstraZeneca plc ( AZN ) will elect to end the partnership between the companies at mid-year, as well as lost revenue from patent expirations across multiple markets and recently announced product divestitures.
Analysts expect the company to earn $3.48 per share for the year on revenues of $43.35 billion.
Merck said it is exploring strategic options for its Animal Health and Consumer Care businesses. The company expects potential actions in 2014.
Under their clinical collaboration deals announced today, Pfizer and Merck will evaluate in Phase I/II clinical studies the safety and efficacy of MK-3475 in combination with Pfizer's small molecule kinase inhibitor axitinib in patients with renal cell carcinoma, and separately MK-3475 plus PF-05082566, an investigational immuno-oncology agent that targets the human 4-1BB receptor, in multiple cancer types.
Incyte and Merck will collaborate on a randomized, double-blind placebo controlled Phase I/II study to evaluate the safety and efficacy of a regimen combining MK-3475 with Incyte's investigational immunotherapy agent, INCB24360, an indoleamine 2, 3-dioxygenase inhibitor, in patients with previously treated metastatic and recurrent NSCLC, among other advanced or metastatic cancers.
Amgen and Merck will evaluate MK-3475 in combination with Amgen's investigational oncolytic immunotherapy talimogene laherparepvec in a Phase I/II study in patients with previously untreated advanced melanoma.
Additionally, Merck said it will start a new Phase I 'signal finding' study to evaluate the safety and efficacy of MK-3475 monotherapy in 20 different PD-L1-positive solid tumor types that were not studied previously.
MRK closed Tuesday's regular trading at $53.51. In Wednesday's pre-market activity, the stock is adding $1.49 or 2.78 percent to $55.00.
For comments and feedback: contact firstname.lastname@example.org