Merck’s global sales jump 12% in second quarter

Merck’s global sales jump 12% in second quarter

Soaring sales of its cancer blockbuster and vaccines helped drive Merck’s second-quarter profit up a whopping 54%, blowing past Wall Street expectations.

The maker of cancer immunotherapy drug Keytruda and diabetes pill Januvia also benefited from slightly reduced spending on research and restructuring, even as it becomes a bigger payer in advanced cancer medicines.

The Kenilworth, New Jersey, company raised its revenue forecast for the year by more than $1 billion.

That’s despite the fact that Chief Financial Officer Rob Davis noted Merck doesn’t think it can offset declining prices in other countries with sizeable price hikes in the U.S., as it has been doing for several years.

“We no longer see the benefit of those price increases in the United States because of obviously the changing dynamics. And so as you look in total, we do continue to believe we’re going to see declining price as we look forward impacting our margins,” Davis said, responding to an analyst’s question on a conference call.

Merck and other top drugmakers for years routinely hiked U.S. list prices 10% or more annually, but many are starting to take fewer or smaller price hikes, as rising drug prices have drawn increasing furor from patients, politicians and advocacy groups, many newly formed, for the past three years.

Both Congress and the Trump administration have been proposing various strategies to at least slow the rise of prices and patients’ out-of-pocket costs. Drug prices have been an issue in the run-up to prior national elections, but the pressure has not been as sustained as it is today, leaving drugmakers, many of which make up to half their revenue in the U.S., nervous about their future results.

Investors didn’t seem upset by the price discussion. Merck shares closed up 78 cents to $83.27 after jumping as high as $85.17.

Merck reduced its 2018 earnings per share forecast due to a charge for the just-closed acquisition of Peloton Therapeutics.

During the quarter, Merck also bought a second company developing cancer therapies, Tilos Therapeutics, and a third developing ways to boost the immune system to fight diseases.

Until 5 years ago, Merck had little presence in cancer other than Emend for treating nausea and vomiting caused by chemotherapy. But Keytruda’s dominance in the market — it’s now approved for treating 20 cancer types and patient groups — has shifted much of Merck’s research and revenue to oncology.

Keytruda sales jumped 58% to $2.63 billion in the quarter, as the biologic drug continues to rack up more approvals, most recently for patients with advanced small cell lung cancer who’ve failed other treatments, and as initial treatment for advanced head and neck cancer.

“We estimate Keytruda sales will exceed $16 billion by 2022, driven by continuing uptake within lung cancer and increasing indications into other types of cancers,” Edward Jones analyst Ashtyn Evans wrote to investors.

Revenue also is growing from partnerships with other companies to jointly sell Lynparza for ovarian cancer and Lenvima for liver, kidney and thyroid cancer.

Meanwhile, sales continue to wane for older drugs for more common conditions including diabetes, high cholesterol, asthma and allergies.

“Given Merck’s strong financial position, we believe the company will continue to supplement its internal drug development with acquisitions,” Evans wrote.

Merck CEO Ken Frazier said he doesn’t plan megadeals like the one rival Pfizer announced Monday because of their potential to disrupt research and development. Instead, he’s looking for smaller deals that easily fit into Merck’s portfolio.

The drugmaker reported net income of $2.67 billion, or $1.03 per share. Earnings, adjusted for one-time costs, were $1.30 per share, or 14 cents better than analysts anticipated.

Merck posted revenue of $11.76 billion in the quarter, up 12%.

Its Gardasil vaccine against the cancer-causing human papilloma virus had sales rise 46% to $886 million, and several other vaccines saw higher sales. Former top sellers Januvia and Janumet, pills for Type 2 diabetes, saw sales decline 4% and 9% respectively amid heavy pressure for low prices in the ultracompetitive diabetes field.

Sales of veterinary medicines such as flea-and-tick killer Bravecto increased 3% to $1.12 billion.

Merck now expects full-year earnings in the range of $3.78 to $3.88 per share, down from its April forecast of $4.04 to $4.14. The company forecast revenue in the range of $45.2 billion to $46.2 billion, up from the prior $43.9 billion to $45.1 billion forecast.

Just Posted

Pembina buying Kinder Morgan Canada and U.S. portion of Cochin pipeline

CALGARY — Shares in Pembina Pipeline Corp. drifted lower Wednesday morning after… Continue reading

Hazardous materials teams aiding in cleanup of fiery Alberta crash scene

CEREAL, Alta. — Police expect a stretch of southeastern Alberta highway that… Continue reading

Red Deer to change its budgeting process with an eye to the future

City is moving towards multi-year budgeting

One dead, others injured after fiery crash in southeastern Alberta

CEREAL, Alta. — One person is dead and others have been injured… Continue reading

Liberals unhurt, Tories not helped by scathing SNC-Lavalin report: Poll

OTTAWA — A new poll suggests a scathing ethics report on Prime… Continue reading

Your community calendar

Thursday The Red Deer and District Garden Club hosts its annual Flower… Continue reading

Ethics commissioner ready to testify to committee today: NDP critic

OTTAWA — The NDP’s Charlie Angus says he expects ethics commissioner Mario… Continue reading

Beijing appeals to US to ‘meet China halfway’ on trade

Beijing appealed to Washington on Wednesday to “meet China halfway” and end… Continue reading

Inflation hits Bank of Canada 2% target for second straight month

OTTAWA — The Canadian annual inflation rate came in at two per… Continue reading

Workers escorted away during Border Services probe at Vancouver horse track

VANCOUVER — Several people were removed form a Vancouver horse racing track… Continue reading

RCMP originally planned to arrest Meng Wanzhou on plane, defence lawyers say

VANCOUVER — The defence team for a Huawei executive wanted on fraud… Continue reading

Alberta oil curtailment rules extended to late 2020 as pipeline delays persist

CALGARY — A program that allows the Alberta government to impose production… Continue reading

Alberta city votes to keep money flowing to supervised drug consumption site

LETHBRIDGE — City council in Lethbridge has voted down a motion that… Continue reading

Most Read