Merck & Co has suffered a major setback during the first quarter ended March 2013 on account of loss of exclusivity and adverse foreign exchange rates. Its sales declined by nine per cent to $10,671 million from $11,731 million in the corresponding period of last year. Its net profit also declined by 8.3 per cent to $1,593 million from $1,738 million. Earnings per share for the quarter worked out to $0.52 as against $0.56 in the last period.
Its pharmaceutical sales moved down by 11.8 per cent to $8,891 million from $10,082 million as the sales of Singulair declined by 75 per cent to $337 million from $1,340 million and that of Januvia by 3.8 per cent to $884 million from $919 million. However, sales of Gardasil vaccine, Zostavax, Remicade, Simponi and Isentress improved during the quarter under review.
Sales from emerging markets grew by six per cent, which accounted for approximately 21 per cent of pharmaceutical sales in the first quarter of 2013. China continues to be a key driver of growth in the emerging markets with sales increasing 23 per cent. Its US sales declined by 22.3 per cent to $3,256 million from $4,189 million and that in Europe moved down by 3.6 per cent to $2,465 million from $2,558 million. Even in Japan, its sales declined sharply by 18.4 per cent to $1,034 million from $1,267 million.
Kenneth C Frazier, chairman and CEO, said, “Our first quarter performance reflects the challenges of major patent expiries coupled with the impact of currency and other headwinds. During the quarter, we took focused actions to reach our EPS target while at the same time advancing Merck's pipeline in our laboratories and through strategic deals and partnerships, I remain confident in the future opportunities for our strong and diverse business and committed to delivering long-term value to our shareholders.”
Merck now expects full-year 2013 non-GAAP EPS to be between $3.45 and $3.55. It updated its full-year guidance due to pressures on sales that are greater than previously anticipated, including foreign exchange, as well as new R&D programs and a revised tax rate. It expects three to four per cent lower sales in 2013 with foreign exchange accounting or more than two per cent points of the decline.
Meanwhile, Merck has announced that its board of directors has authorized additional purchases of up to $15 billion of Merck’s common stock for its treasury. The company expects to repurchase approximately $7.5 billion of common stock over the next 12 months, financed through a combination of debt issuance and operating cash flows, with the remainder to be repurchased over time with no time limit. Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions.