Merck & Co., Inc. has notched up strong performance across a range of the products and those of the Merck/Schering-Plough partnership, as well as gains from certain asset and product divestitures. Worldwide sales were $5.8 billion for the quarter, an increase of 7 per cent from the first quarter of 2006. Net income for the first quarter of 2007 was $1,704 million, compared to $1,520 million in the first quarter of 2006. It net earnings improved by 12 per cent to $1.7 billion as against $1.5 billion in the corresponding period of last year.
"Many of our key products, both established and newly-launched, posted impressive growth and reinforced the underlying strength of our core business," said Richard T Clark, chief executive officer and president. "Our performance in the first quarter is further evidence that the path we have charted to return Merck to a leadership position in our industry is the right one. We still have much to do to realize our longer-term goals, but we are executing on our plan with confidence."
Materials and production costs were $1.5 billion for the quarter, an increase of 14 per cent from the first quarter of 2006. The first-quarter 2007 and first-quarter 2006 costs include $118 million and $205 million, respectively, for costs associated with the global restructuring program. The gross margin was 73.6 per cent for the first quarter of 2007 and 75.2 per cent for the first quarter of 2006, which reflect 2.0 and 3.8 percentage point unfavourable impacts, respectively, relating to the restructuring costs noted above. The gross margin in the current quarter was affected by changes in product mix.
Marketing and administrative expenses were $1.8 billion for the first quarter of 2007, an increase of 5 per cent from the first quarter of 2006. The increases largely stem from the level of activity required to support the worldwide launches of Gardasil and Januvia.
Research and development expenses were $1.0 billion for the quarter, an increase of 9 per cent from the first quarter of 2006. The amounts for the first quarter of 2007 and the first quarter of 2006 included $2 million and $55 million, respectively, relating to the global restructuring programme.
Merck reaffirms full-year 2007 EPS of $2.75 to $2.85, excluding the restructuring charges related to site closures and position eliminations. Merck anticipates reported full-year 2007 EPS of $2.60 to $2.75. The company remains on track to deliver double-digit compound annual EPS growth, excluding one-time items and restructuring charges, by 2010 from the 2005 base.