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Merck Profit Falls on Competition

By Reuters
Published | Updated

NEW YORK – Merck & Co. Inc. (MRK) on Wednesday said second-quarter net profit fell, as rival products gobbled up market share from its arthritis and cholesterol drugs.

The company, based in Whitehouse Station, N.J., earned $1.77 billion, or 79 cents per share, compared with $1.87 billion, or 83 cents per share, a year-earlier. The year-ago results include contributions from Medco (search), the pharmacy benefit manager that Merck has since spun off.

Analysts polled by Reuters Estimates had forecast a profit of 79 cents per share.

Merck said it was difficult to pinpoint sales trends for specific drugs in the quarter because of changes in the way inventories of its medicines are stocked. But it said the best gauge of sales trends was the number of prescriptions of each drug sold in the United States.

U.S. prescriptions of arthritis drug Vioxx fell 5 percent, hurt by safety concerns and Pfizer Inc's (PFE) popular Celebrex and Bextra brands.

Prescriptions for osteoporosis treatment Fosamax were unchanged from the 2003 quarter, as many postmenopausal women at risk of the bone-thinning condition opted instead for Procter & Gamble Co.'s (PG) newer Actonel (search) treatment.

U.S. prescriptions for Merck's top-selling product, cholesterol-fighter Zocor, edged up only 3 percent amid fierce competition from Pfizer's Lipitor (search), whose U.S. sales jumped 11 percent in the quarter.

Merck is awaiting approval, which possibly could come this week, for a new cholesterol tablet that combines Zocor with Schering-Plough Corp.'s (SGP) newer Zetia treatment in a single pill. Wall Street expects the new drug, Vytorin, to eventually post annual sales of up to $8 billion.

Prescriptions for Merck hypertension drugs Cozaar and Hyzaar rose 5 percent in the quarter, a slowdown in growth as increasing numbers of patients opted for Novartis AG's similar Diovan product.

But prescriptions for asthma drug Singulair (search) jumped 21 percent, making it the sole strong performer among the company's biggest medicines.

Merck said it expects flat third-quarter earnings of 80 cents to 84 cents per share. Analysts have forecast 83 cents a share, according to Reuters Estimate.

The company reaffirmed it expects 2004 per share earnings of $3.11 to $3.17, up to 8.6 percent above last year.