Pharmaceutical giant Merck (MRK 0.10%) found the sledding tough this brisk winter morning after reporting fourth-quarter results that delivered a slight increase in adjusted EPS, but also a decline in sales for a number of key drugs.
For the fourth quarter, Merck reported revenue of $11.32 billion, a 3.6% decline from the $11.74 billion reported in the year-ago period, as its adjusted profit per share improved modestly to $0.88 from $0.83. Including one-time costs, Merck's GAAP profits fell 14% to $0.26 per share. Negative foreign currency translation was responsible for a three-percentage-point knock against Merck's quarterly revenue decline.
The real story for Merck's fourth-quarter report was its struggle against patent losses on key drugs that weighed down its final results.
The loss of patent exclusivity on Singulair (which saw a 38% decline in sales), Temodar, and Maxalt hampered any chance of revenue growth, while top-selling diabetes drug Januvia struggled to a 1% revenue decline, totaling $1.12 billion in sales for the quarter.
Offsetting this weakness were inflammatory disease drugs Remicade and SImponi, which, combined, saw sales improve 19% to $766 million as Simponi's launch in other countries meaningfully affected sales growth. HIV-therapy Isentress also delivered an impressive 16% increase in sales to $442 million. Emerging market growth was another bright spot for Merck, with sales growth of 2% (that includes a negative 6% impact from foreign currency translation) as vaccine, acute care, and diabetes product sales found traction.
The company also announced that it's "exploring strategic alternatives" for its animal health and consumer care businesses to determine if value can be unlocked for shareholders. A decision on whether any action will be taken should be reached this year.
Looking ahead to 2014, Merck is forecasting full-year revenue of $42.4 billion to $43.2 billion, representing a decline of 3% year over year at the midpoint, with adjusted EPS projected in the $3.35 to $3.53 range, which is fairly consistent with the adjusted $3.49 in EPS it reported in fiscal 2013.
