FILE - This May 1, 2018 file photo shows Merck corporate headquarters in Kenilworth, N.J. Merck & Co. reports earnings Friday, Feb. 1, 2019. (AP Photo/Seth Wenig, File)

Merck 4Q net powered by cancer treatment sales, lower taxes

February 01, 2019 - 8:58 am

Higher medicine sales and lower restructuring and other costs lifted drugmaker Merck to a $1.83 billion profit in the fourth quarter, as it edged past Wall Street expectations.

The maker of blockbuster cancer drug Keytruda and Januvia diabetes pills lost $1.05 billion a year earlier, when it had a $2.92 billion tax bill due to a federal tax overhaul.

The Kenilworth, New Jersey, drugmaker on Friday reported net income of 69 cents per share. Adjusted for costs related to mergers and acquisitions and other non-recurring costs, that amounted to $2.75 billion, or $1.04 per share, a penny better than expected, according to a survey by Zacks Investment Research

Revenue was $11 billion, slightly better than expected and up 5 percent from $10.43 billion in 2017's last quarter. Sales in the latest quarter were reduced 3 percent due to unfavorable currency exchange rates.

"Last year was a strong one for Merck marked by substantial progress on scientific and commercial fronts," Chief Executive Kenneth C. Frazier said in a statement. "We enter 2019 with good momentum."

Sales of prescription drugs totaled $9.83 billion, up 6 percent.

Keytruda, an immuno-oncology that revs up the immune system to treat numerous cancer types, brought in $2.15 billion in the quarter, up 66 percent. It generated $7.17 billion in 2018, up 88 percent, and now accounts for more than 20 percent of the company's revenue.

During the quarter, Keytruda won U.S. approval for treating three more patient groups and now has approval for 11 different cancer types. Japan, one of the world's top markets for medicine, approved Keytruda for five different uses during the quarter, and the European Union approved it for a type of melanoma.

Merck is testing the injected drug in many other cancer types, alone and in combination with other cancer treatments.

Vaccine sales also rose, led by $835 million for Merck's Gardasil 9 vaccine, which protects against a sexually transmitted virus that causes cancer.

But sales of Type 2 diabetes pills Januvia and Janumet, previously Merck's top-selling franchise, dipped to $1.47 billion as insurers continue pressing for lower prices and competition increases in the huge diabetes drug market.

Animal health sales jumped 6 percent to $1.04 billion.

Merck & Co. said it expects full-year earnings in the range of $4.57 to $4.72 per share, with revenue in the range of $43.2 billion to $44.7 billion. Industry analysts had been projecting per-share earnings of $4.69, and revenue of $44.2 billion.

For all of 2018, Merck reported net income of $6.22 billion, or $2.32 per share — more than double its 2017 profit. Sales in 2018 totaled $42.29 billion, up 5 percent from 2017.

In premarket trading shares rose 2.4 percent to $76.21.


This story has been corrected to show that Keytruda sales rose 66 percent, not 88 percent, in the fourth quarter.


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Elements of this story were generated by Automated Insights ( using data from Zacks Investment Research.

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