Vioxx pushes Merck profit down; analyst predicts takeover
Friday, 22 October, 2004
New Jersey-based Merck has reported a 28 per cent drop in quarterly profit and said 2004 earnings will fall as much as 11 per cent due to last month's recall of its Vioxx arthritis drug.
Vioxx had annual sales of US$2.5 billion before the recall, accounting for over 10 per cent of Merck's annual revenues.
The recall cost the drugmaker US$553 million in earnings, including customer returns and write-offs of inventory. The medicine was withdrawn on 30 September after being linked to heart attacks and strokes.
Third-quarter earnings fell to US$1.33 billion, or 60 cents per share, from US$1.86 billion, or 83 cents, a year earlier. Wall Street analysts expected 71 cents a share.
"Merck has become really scary; its earnings were even lower than I expected, even with the Vioxx debacle," said Bijal Shah, an analyst with 1838 Investment Advisors.
Shah said Merck's earnings prospects will remain dim because it is developing few important drugs and the patent on its biggest product, $5-billion-a-year cholesterol fighter Zocor, will lapse in 2006 and leave the blockbuster prey to competition from cheaper generics.
Global company sales totalled $5.54 billion for the third quarter, compared with $5.76 billion a year earlier as it wrote down its inventories of now-useless Vioxx.
Merck expects fourth-quarter earnings of 48 cents to 53 cents per share, including about US$700 million to $750 million in lost sales of Vioxx and other recall costs.
Consequently, Merck said it expects full-year 2004 earnings of US$2.59 to $2.64 per share, a decline of 9.5 per cent to 11 per cent from last year.
Shah said he has doubts whether Merck can remain an independent company in its wounded state. "Some foreign company could buy it to sell their products."
Mouth bacteria linked to increased head and neck cancer risk
More than a dozen bacterial species that live in people's mouths have been linked to a...
Life expectancy gains are slowing, study finds
Life expectancy at birth in the world's longest-living populations has increased by an...
Towards safer epilepsy treatment for pregnant women
New research conducted in organoids is expected to provide pregnant women with epilepsy safer...