$950M Vioxx charge weighs on Merck earnings

In a couple of key respects, Merck's earnings report reads like a repeat of other Big Pharma third-quarter results. Earnings, excluding charges, were up to 85 cents per share, aided in part by the company's big cost-cutting program. But at $11.1 billion, sales were soft, failing to reach analyst estimates.

Company execs said Merck is on track with its plans to cut 15,000 jobs from its workforce, combined last year with Schering-Plough in a $49 billion merger. "Focus on cost control is working," UBS Securities analyst Marc Goodman wrote to clients, according to Bloomberg. "We continue to see this as a cost-cutting story ahead of major pipeline events and think management is doing a good job."

But in one key respect, Merck's earnings release was quite different. It included a $950 million legal reserve for a government probe of its now-long-withdrawn pain drug Vioxx. The grand jury probe, instigated by the U.S. Attorney in Massachusetts, was previously disclosed.

Some bright spots: diabetes drugs Januvia and Janumet boosted sales by 28 percent to $847 million, while the HIV drug Isentress grew by 41 percent to 4278 million. These increases helped offset declines in Cozaar and Hyzaar sales, now that the drugs face generic competition.

- see the Bloomberg story
- read the news from Reuters