Merck profit jumps to US$2.3b, cancer drug Keytruda generates US$3.1b sales

Pharma maker Merck on Wednesday reported net income of US$2.36 billion, or 92 US cents per share, up from US$1.83 billion, or 69 US cents per share, a year earlier for the frouth quarter.

Adjusted earnings came to US$2.98 billion, or US$1.16 per share, beating projections from Wall Street analysts by a penny.

The maker of Januvia Type 2 diabetes pills reported revenue of US$11.87 billion, up by 8 percent but below analysts’ expectations for US$11.98 billion.

Merck’s stock closed Wednesday down US$2.53, or 2.9 percent, at US$85.83, while broader markets were all up.

“We understand the strategic and financial logic of the planned (spinoff) but anticipate a rocky near-term share price reaction,” Citigroup analyst Andrew Baum wrote to investors.

Merck’s pharmaceutical business posted sales totaling US$10.53 billion in the fourth quarter. Cancer blockbuster Keytruda, one of the top new oncology drugs that boost the immune system to hunt and kill cancer cells, led sales, bringing in US$3.11 billion in the quarter.

For the year, it posted a whopping US$11.08 billion in sales, nearly 24 percent of total company sales.

During the quarter, Merck received its 23rd approval for Keytruda in treating different cancer types and patient groups, this time in a type of bladder cancer.

Kenilworth, New Jersey-based Merck’s growing veterinary medicines business, which sells Bravecto flea and tick killer and Vetsulin insulin for dogs and cats, had sales of US$1.12 billion in the quarter, up 8 percent from a year earlier.

During the fourth quarter, Merck paid US$2.7 billion for ArQule, a company developing treatments for B-cell cancers, and won approval for Ervebo, the first vaccine against the Ebola virus. It’s being given to people in Congo to fight the epidemic there.

Merck said the spinoff of women’s medicines such as the Nexplanon birth control implant, older drugs including cholesterol treatments Zetia and Vytorin, and three biosimilars, or near-copies of expensive biologic drugs, is expected to be completed in the first half of 2021. It will create a new company, expected to be based in New Jersey, via a tax-free distribution to Merck shareholders.

Merck expects to record US$1.5 billion in operating efficiencies by 2024 with the spinoff.

The company forecast adjusted annual net income of US$5.62 to US$5.77 per share, for all of 2020, and revenue ranging from US$48.8 billion to US$50.3 billion. Analysts were expecting earnings of US$5.64 per share and revenue of US$46.4 billion.

For all of 2019, Merck posted net income of US$9.84 billion, or US$3.81 per share, on revenue of US$46.84 billion.