Merck reports a drop in profits for third quarter

Pharmaceutical giant Merck & Co. said Thursday that third-quarter earnings dropped significantly year-over-year on charges related to the withdrawal of Vioxx from the market.

Quarterly net income fell to $1.33 billion, or 60 cents per share, from $1.86 billion, or 82 cents per share, a year ago. The latest quarter includes a charge of $552.6 million, or 25 cents per share, related to the withdrawal of Merck's Vioxx drug. The charge covers estimated customer returns of product previously sold, write-offs of inventory held by Merck and costs to undertake the withdrawal of the product.

Worldwide sales were $5.5 billion for the quarter, including a $491.6 million loss related to the withdrawal of Vioxx, which had sales of $2.5 billion in 2003.

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Analysts surveyed by Thomson First Call were looking for Merck to post earnings of 71 cents per share on sales of $5.93 billion.

Global sales of asthma drug Singulair reached $626 million in the third quarter, which was 2 percent higher than the third quarter of 2003. Sales of Merck's coxib, Arcoxia, reached $61 million in the third quarter. Global sales of osteoporosis drug Fosamax were strong, reaching $778 million during the quarter, representing year-over-year growth of 13 percent.

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Merck anticipates fourth-quarter earnings per share of 48 cents to 53 cents, which includes the impact of $700 to $750 million in foregone Vioxx sales of VIOXX and potential additional fourth-quarter costs for the drug's withdrawal. As a result, Merck forecasts full-year 2004 profits of $2.59 to $2.64 per share, including Vioxx-related costs of 50 cents to 55 cents.

Analysts are predicting fourth-quarter and fiscal year earnings of 35 cents and $2.58 per share, excluding items.