When Merck (NYSE: MRK) pulled back long-term guidance earlier this year, refusing to cut R&D spending , investors fretted about the company's ability to turn around. In the short term, though, it doesn't look appear that there's much to be worried about.

Revenue was up 1% in the first quarter. The double-digit growth in six different drugs helped counter the 46% drop in sales of Cozaar/Hyzaar, which faces generic competition.

Asthma treatment Singulair and anti-inflammatory Remicade still top the best-seller list, but Januvia and its sister Janumet are climbing fast, with 45% and 52% growth respectively. Combined sales of the diabetes drugs now exceed $1 billion per quarter. Growth of the oral drugs doesn't seem to be phased by the fight for patients between Novo Nordisk's (NYSE: NVO) Victoza and Amylin Pharmaceuticals (Nasdaq: AMLN) and Eli Lilly's (NYSE: LLY), Byetta, which both have to be injected.

Where Merck really shined was on the bottom line. Adjusted earnings per share increased more than 10% thanks to cost cutting and a slight decrease in the number of shares purchased through the buyback. Excluding one-time costs, gross margins were up, marketing and administrative expenses were down, and even research and development costs dropped a little.

That last bit should scare you a little. R&D is the backbone of a drugmaker's long-term success. On the bright side, it doesn't look as though Merck is mortgaging the farm, unlike Pfizer (NYSE: PFE), which slashed its R&D expenses. Merck cut its 2011 R&D spending guidance by only $100 million out of a total of between $8 billion and $8.4 billion. A measly 1% cut might make investors happy, but it isn't likely to make much of a difference in the long run.

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