Drugmaker Merck & Co. said Friday that third-quarter profit rose 2 percent as reduced spending on overhead offset lower sales due to new generic competition for its top-selling drug, Singulair.
The maker of diabetes pill Januvia beat Wall Street's profit expectations. The company also narrowed its 2012 profit forecast, to a range of $2.08 to $2.24 per share, from its July forecast of $2.04 to $2.30.
Merck, based in Whitehouse Station, N.J., said net income was $1.73 billion, or 56 cents per share. That was up from $1.69 billion, or 55 cents per share, a year earlier.
Excluding charges totaling $1.2 billion, net income was $2.93 billion, or 95 cents per share, 2 cents more than analysts expected. Charges included $1.34 billion in acquisition and integration costs, plus $163 million in restructuring costs.
Revenue was $11.5 billion, down 4 percent. Analysts expected $11.57 billion.
Sales of asthma and allergy pill Singulair dove 55 percent, to $602 million.
Strong global sales offset the impact of Singulair's U.S. patent expiring on Aug. 3, CEO Kenneth Frazier said in a statement. The drug brought Merck $5.5 billion in sales last year.
Like nearly all big drugmakers that have reported third-quarter results, Merck has been hit by new generic competition to a top seller, as patients and insurance plans defect almost overnight to the much-cheaper copycat drugs. But Merck has fared better than most, with only a small drop in total revenue and slightly higher profit.
That's because four Merck growth drivers posted sales increases of at least 15 percent: Januvia and combination diabetes pill Janumet, HIV drug Isentress and Gardasil, a vaccine against sexually transmitted cancers caused by human papilloma virus. Januvia and Janumet together brought in nearly $1.4 billion.
In addition, the company reduced spending on production, marketing, administration and research, and also benefited from lower taxes.
Prescription drug sales totaled $9.88 billion, down 5 percent. But consumer health products, including the Coppertone sun-care line and Dr. Scholl's foot-care products, saw sales climb 7 percent to $451 million. Sales of veterinary medicines dipped 1 percent to $815 million.
"With our robust pipeline, we remain on target to submit multiple new products for marketing approval between now and the end of 2013," Frazier said.
Those include suvorexant, a new type of insomnia drug with minimal morning grogginess, and vorapaxar, an anti-clotting drug for preventing heart attacks and strokes in certain patients. Others include osteoporosis drug odanacatib, cholesterol medicine Tredaptive, ovarian and lung cancer drug vintafolide, a drug to reverse the effects of anesthesia called Bridion and an improved version of Gardasil.