Cancer darling can't save Merck, as sales slip for quarter

Cancer darling can't save Merck, as sales slip for quarter
Cancer darling can't save Merck, as sales slip for quarter

Merck reported its third-quarter earnings Monday, showing that total pharmaceutical sales declined by 4% over the year-ago period.  

The deficit was blamed on the selling-off of certain products, as well as a number of drugs losing patent exclusivity. Revenue in the drugmaker's consumer care division was down by 9% for the third quarter, mostly owing to the sale of the unit to Germany-based Bayer AG for $14.2 billion in May.  

Merck reported lower sales of Pegintron and Victrelis, its two drugs for hepatitis C virus which have largely given way to to competition from Gilead's run-away blockbuster cure for the disease, Sovaldi—and recently approved combo drug Harvoni. Merck bought biotech Idenix for $4 billion this past June in a bid to stay afloat in HCV, as the Cambridge-based drugmaker has a considerable patent pool of valuable nucleotide inhibitors, similar to Sovaldi (sofosbuvir).

HPV vaccine Gardisil also saw sales fall 11% compared to the same time last year. Cholesterol drugs Zetia and Vytorin dropped 3%, due to lower demand in the US. The drugmaker also reported lower sales from allergy treatment Singulair, down 22%, and chemotherapy drug Temodar, as both medications lost patent exclusivity.

Merck did get a bit of good news on the pipeline front. Its promising immuno-oncology drug Keytruda received a second Breakthrough Therapy designation—for patients with advanced non-small cell lung cancer—adding to its first in advanced melanoma.

ISI analyst Mark Schoenebaum wrote in an investor note that the drugmaker will have data available from Keytruda's Phase-II and Phase-III trials in lung cancer by the end of 2015. Merck reported that 900 patients are currently being treated with the drug in advanced melanoma, and it expects a few hundred more each month to become eligible.

Even with sales faltering, Merck managed to beat earnings estimates due to cost-cutting measures, which include slashing R&D spend. Clinical development expenses were down $1.7 billion from the year-ago period—coming in at $1.5 billion.

In 2013, Merck's R&D spend fell 9% to $7.1 billion for the year, or 16.1% of revenue, putting it fourth on the list of companies in terms of R&D spend as a percent of sales, according to MM&M's May Pharma Report. Marketing and admin expenses declined by $200 million for the quarter, which Merck attributed to productivity measures.


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