Merck sales disappoint as Januvia, Remicade fall short

Thu May 5, 2016 8:49am EDT
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By Ransdell Pierson

(Reuters) - Merck & Co Inc (MRK.N: Quote) on Thursday reported lower-than-expected quarterly revenue, hurt by disappointing sales of its Januvia diabetes treatment and Remicade arthritis drug.

But the second-largest U.S. drugmaker beat first-quarter earnings forecasts because of cost controls and a weakening dollar, and it slightly raised its full-year profit outlook.

Combined sales of Januvia and a related combination medicine called Janumet edged up 1 percent to $1.41 billion, $30 million shy of Wall Street expectations. Demand for the drugs, Merck's biggest franchise and former sparkplugs for company growth, has waned due to new competition, including from Eli Lilly & Co's (LLY.N: Quote) Jardiance and other members of a family of medicines called SGLT-2 inhibitors.

Remicade sales fell 30 percent to $349 million, $25 million below forecasts. The injectable treatment for rheumatoid arthritis faces escalating competition in Europe from cheaper biosimilars.

A bright spot in the earnings report was Keytruda, a new cancer treatment that works by taking the brakes off the immune system. Its sales rose to $249 million from $83 million a year earlier, slightly above expectations.

But Keytruda sales are ramping up more slowly than those of Bristol-Myers Squibb Co's (BMY.N: Quote) similar new immuno-oncology product called Opdivo, which also treats melanoma and lung cancer and is being tested for an array of other types of cancer. Its sales jumped to $704 million in the quarter.

For Merck, "pressure on important marketed products such as Januvia and Remicade will likely limit near-term growth opportunities" and offset faster-growing products like Keytruda, Credit Suisse analyst Vamil Divan said in a research note. Sales of animal health products were flat at $829 million, about $20 million below Wall Street forecasts, but would have risen 9 percent if not for the weakening dollar, which reduces sales outside the United States, Merck said.

Total revenue slipped 1 percent to $9.31 billion, below the average estimate of $9.46 billion among analysts surveyed by Thomson Reuters I/B/E/S.   Continued...

A view of the Merck & Co. campus in Linden, New Jersey March 9, 2009, after Merck & Co Inc said it would acquire Schering-Plough Corp in $41.1 billion deal, widening Merck's pipeline and diversifying its portfolio of medicines. REUTERS/Jeff Zelevansky