Merck & Co has posted lower net profit during the third quarter ended September 2013 due to patent expiries. Its net income declined by 35 per cent to $1,124 million from $1,729 million in the similar period of last year and its Worldwide sales declined by 4 per cent to $11,032 million from $11,480 million in the corresponding period of last year.
Third-quarter pharmaceutical sales declined 4 per cent to $9.5 billion, including a 2 per cent negative impact due to foreign exchange. Declines of Singulair (montelukast sodium), Maxalt (rizatriptan benzoate), Temodar (temozolomide) and Cozaar (losartan potassium)/Hyzaar (losartan potassium and hydrochlorothiazide) following loss of market exclusivity were partially offset by growth of Remicade (infliximab), Gardasil [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant], Simponi (golimumab) and Isentress (raltegravir).
Sales from emerging markets decreased 4 per cent, including a 6 per cent negative impact from foreign exchange. Emerging market sales accounted for approximately 20 per cent of pharmaceutical sales in the third quarter of 2013 with strong growth in Brazil, Korea, Russia and Turkey, offset by declines in China and Mexico.
Kenneth C. Frazier, chairman and chief executive officer, Merck. “We are improving productivity and focusing our R&D and commercial resources more precisely to enable our investments in the best opportunities for innovation and growth. We are encouraged that our combination hepatitis C regimen has joined our anti-PD-1 immunotherapy in being designated as a ‘breakthrough therapy’ by the FDA.”
Merck’s sales of Gardasil, a vaccine to help prevent certain diseases caused by four types of human papillomavirus (HPV), were $665 million, an increase of 15 per cent for the quarter. The increase was driven by higher sales in the United States, which reflects continued strong uptake of use in males, as well as higher public sector sales of approximately $60 million. Worldwide sales of Singulair, a once-a-day oral medicine for the chronic treatment of asthma and the relief of symptoms of allergic rhinitis, declined 53 per cent to $280 million in the third quarter. The patents for Singulair expired in the United States in August 2012 and expired in major European markets in February 2013. The company has experienced a significant and rapid reduction in sales in these markets.
Research and development (R&D) expenses, on a non-GAAP basis, were $1.7 billion in the third quarter of 2013, a decrease from $1.9 billion in the third quarter of 2012 reflecting ongoing productivity improvements and timing of certain programmes that will begin in the fourth quarter.
For the nine months period ended September 2013, Merck's net sales declined by 8 per cent to $32,713 million from $35,530 million in the corresponding period of last year and its net profit declined by 31 per cent to $3,623 million from $5,261 million.
Merck has narrowed the range of full-year 2013 non-GAAP EPS to be between $3.48 and $3.52, and the 2013 GAAP EPS to be between $1.61 and $1.79. The 2013 non-GAAP range excludes acquisition-related costs, costs related to restructuring programs and certain other items.
At current exchange rates, Merck continues to anticipate full-year 2013 sales to be approximately 5 to 6 per cent below prior year levels with foreign exchange accounting for approximately 2.5 percentage points of the decline.