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Merck 4Q meets estimates
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January 26, 2000: 12:35 p.m. ET
Drug maker records double-digit growth on strength of painkiller Vioxx
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NEW YORK (CNNfn) - Merck & Co., the largest U.S. drug maker, reported a 12 percent increase in fourth-quarter profit Wednesday, matching Wall Street's expectations as sales of its new arthritis treatment Vioxx and some of its older medications boosted the bottom line.
Merck's results are on par with the double-digit earnings growth reported by other major pharmaceutical makers in the quarter, including Pfizer Inc. (PFE), Johnson & Johnson (JNJ), Bristol-Myers Squibb (BMY) and Warner-Lambert Co. (WLA), a fast-growing drug maker that soared above forecasts.
An exception was American Home Products Corp. (AHP), which as expected posted only a 1 percent increase in operating earnings on weak sales at its herbicides and pesticides unit.
Merck's operating income totaled $1.57 billion, or 66 cents per diluted share, vs. $1.4 billion, or 58 cents per share, a year earlier. The results were in line with the First Call Corp. consensus forecast of industry analysts.
Sales for the quarter rang in at $9 billion, up 19 percent from year-earlier period.
Sales of the painkiller Vioxx, which was introduced eight months ago, totaled $264 million. The drug competes with Monsanto Co.'s blockbuster Celebrex.
Merck's best-selling drug, cholesterol-lowering agent Zocor, recorded a 15 percent sales jump to $1.28 billion. But the drug faces increasing competition from Lipitor, a powerful new rival made by Warner-Lambert.
Sales of Fosamax, an osteoporosis drug, rose 23 percent to $290 million. Other top performers were blood-pressure drugs Cozaar and Hyzaar, and asthma treatment Singulair.
But sales of several older medications dropped during the quarter. Fourth-quarter sales of Vasotec slipped 4 percent to $590 million, while ulcer drug Pepcid posted sales of $235 million, an 18 percent drop.
The company said its Merck-Medco pharmacy benefits management business handled 97 million prescriptions during the quarter, 14 percent above 1998 levels.
Merck also credited a streamlining in its production process for helping results.
The company's fourth-quarter performance was solid, but "the key issue for Merck stock really hasn't changed," said Alex Zisson, a pharmaceutical analyst for Chase H&Q who rates Merck stock a "market perform." "I think that issue is, can the new products ramp up fast enough to compensate for the older products that are going off patent?"
Shares of Merck (MRK), a Dow Jones industrial average component, edged up 13/16 to 71-11/16 at midday Wednesday. That compares with a 52-week trading range of 60-15/16 to 87-3/8.
Pharmaceutical stocks, generally considered among one of the safest sectors for investors, have seen some volatility recently amid merger frenzy in the drug industry. The stocks also have experienced weakness as dollars are flowing into fast-growing biotechnology stocks and out of some big pharmaceutical manufacturers.
Investors also are nervous about proposals in Washington to add prescription drug benefits to the federal Medicare program. The drug industry says that it fears such a benefit could lead to price controls on prescription drugs, damaging their profits and research and development efforts.
Merck has said it has no plans to merge, despite the rampant merger activity under way in the pharmaceutical industry.
The company would lose its No. 1 rank in the U.S. market if Pfizer succeeds in its attempted acquisition of Warner-Lambert. Other recent combinations in the pharmaceutical industry include merger pacts between British-based Glaxo Wellcome PLC (GLX) and SmithKline Beecham (SBH), and the proposed marriage of Pharmacia & Upjohn (PNU) and Monsanto Co. (MTC).
Merck comfortable with
2000 targets
For the year, Whitehouse Station, N.J.-based Merck posted income of $5.9 billion, or $2.45 per diluted share, an increase of 12 percent from $5.25 billion, or $2.15 a share, in 1998. Sales rose 22 percent to $32.7 billion.
Merck also said it was "comfortable" with the current range of analysts' earnings-per-share estimates of between $2.73 and $2.81 for 2000, reiterating "that it would be reasonable to expect earnings to be at the upper portion of this range."
At the same time, the company said that its earnings growth might be stronger in the first quarter than in the following three quarters of 2000. 
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Merck
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