You know, it's not supposed to be like this. According to the "buy and hold forever" investment books that you can find in any library, owning stock in big pharmaceuticals like Merck
Well, it can be, if you can be patient enough to weather the storms.
Merck has seen more than its share of storms of late. But for all the angst, sales in the first quarter were only down 5%, and excluding the impact of Vioxx, sales would have been up 8%. Net income was also down for the quarter (about 15%), but at about $1.37 billion, it was hardly a disaster.
Among the company's biggest products, Singulair revenue grew 18% to $735 million, and Cozaar/Hyzaar sales grew 14% to $719 million. Two other big names, Zocor and Fosamax, were a little less impressive. Zocor sales were down 15% to $1.1 billion, and Fosamax sales were up 2% to $772 million.
Another bright spot was the company's joint venture with Schering-Plough
As we've discussed here at The Motley Fool before, Merck has some high-potential drug candidates very close to hitting the market. Muraglitizar, the first of a new class of oral drugs for treating type 2 diabetes, has been submitted to the Food and Drug Administration, and the company, along with its partner, Bristol Myers Squibb
Merck also plans to submit an application in the second half of the year for Gardasil, a vaccine to prevent human papillomavirus (HPV), genital warts, and related cervical cancers. Cervical cancer is the second most common cancer among women, killing 288,000 worldwide each year, and given that nearly all cases are related to HPV, Gardasil could have huge potential for Merck.
With over 2,300 Vioxx lawsuits filed already, Merck will certainly have its hands full for some time to come. Nevertheless, the base business at Merck seems strong, and the pipeline should give investors reason to expect that better things could be on the way. Though Merck is not the safest pick in the pharma space, the stock is not expensive, the company pays a good dividend, and the pipeline should deliver impressive revenue in a few years' time.
For more on Merck, feel free to check out these past Takes:
- Merck Soldiers On
- Merck's Road to Recovery
- Take Two on COX-2
- Merck Takes Another Body Blow
- Prognosis Good for Merck
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).