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.