Merck ($MRK) managed to beat analyst estimates for fourth-quarter profits and supply slight sales growth of 2%. That's saying something during a quarter when some drugmakers saw profits drop by half or more. But the company is forecasting a relatively flat 2012, and analysts say the year won't be easy. "They face lots of pressure in 2012," Aparna Krishnan of IHS Global told Bloomberg. "It is going to be very challenging."
The biggest short-term challenge is replacing revenues soon to be lost when Merck's asthma drug Singulair--far and away its top seller, with $1.5 billion in Q4 sales--faces generic competition later this year. The company can't count on growth of its arthritis drug Remicade; sales fell by 28%, now that a marketing partnership with Johnson & Johnson ($JNJ) has been renegotiated. The cholesterol drug Vytorin also slipped, with a 16% decline in sales for the period.
Merck's diabetes franchise looks promising, however; as Reuters notes, Januvia sales grew by 42% to $960 million, and its sister pill Janumet grew by 34% to $386 million. The human papillomavirus shot Gardasil also posted solid gains, with a 24% increase to $274 million. And the AIDS fighter Isentress grew by 24% for the quarter, 25% for the year, to $387 million and $1.36 billion, respectively.
Some changes on the expense side raised eyebrows: The company's sales and administrative spending came in at $141 million above expectations. Fortunately for Merck's EPS numbers, that spending was counterbalanced by R&D expenses that were $145 million below forecasted levels.
Special Report: Merck - 10 Largest U.S. Patent Losses
Report shows Big Pharma's patent cliff in graphic detail
Merck to pay J&J $500M in Remicade settlement