Strong sales of chewable flea fighter help Merck Animal Health weather currency woes

Merck ($MRK) said on Tuesday that its animal health sales in the third quarter dropped 7% year over year to $825 million, but the decline was entirely the fault of negative exchange rates. When the impact of currency rates was taken out, the unit's sales were actually up 7%--and the company attributed the rise largely to the popularity of Bravecto, its chewable flea-and-tick fighter, which hit the market in 2014. 

The success of Bravecto was far from guaranteed, because the product aims to displace popular topical flea fighters like Frontline, from Sanofi's ($SNY) Merial. What's more, Merck was facing competition from Sanofi itself, which also launched its chewable, NexGard, in 2014.

Then, late last year, questions about the safety of chewable medicines for dogs arose when the Indianapolis Star ran a series of investigative stories alleging a link between Eli Lilly's ($LLY) Trifexis and 700 deaths of dogs that have been reported to the FDA. Lilly has disputed allegations that the product--which protects against fleas, heartworm and intestinal parasites--is unsafe.

The controversy clearly hasn't impacted Bravecto or NexGard, though. Both continue to steal market share from topical flea-and-tick products, and last quarter, Merial attributed much of its 14% sales growth (minus currency woes) to NexGard.

In Merck's most recent quarter, the animal health unit also benefited from some successes on the food-production side of the business. The company said in its earnings release that it has seen an increase in sales of Porcilis Hyo, a new vaccine that protects pigs from lesions caused by the lung infection Mycoplasma hyopneumoniae. In September, the company launched Porcilis Ileitis, the first injectible vaccine that offers piglets 20 weeks of protection against that disease.

All told, Merck's earnings for the quarter grew 7% year over year to $2.7 billion ($0.96 a share) on sales that were up 4% to $10.1 billion, not counting the impact of foreign exchange, acquisitions and divestitures. The company also upped its EPS guidance for the full year, to $3.55 to $3.65 from $3.45 to $3.55.

- here's the earnings release
- get more on Merck's results at FiercePharma