NEW YORK (Reuters) -
Merck & Co. Inc. said Thursday it expects its first-quarter earnings per share to decline, hurt by a dearth of new drugs and the spin-off of its pharmacy benefits unit.
Merck expects to earn 71 to 73 cents per share for the quarter, excluding a recent acquisition of a biotech company and the sale of its stake in a joint venture with Johnson & Johnson (JNJ: down $0.23 to $52.99, Research, Estimates), compared with 76 cents a year earlier.
Excluding its spun off pharmacy benefits unit Medco Health Solutions Inc. (MHS: up $0.07 to $32.37, Research, Estimates), earnings in the year-ago quarter were 68 cents a share.
The company, which is one of the world's largest drugmakers, reaffirmed its forecast for 2004 profit between $3.11 and $3.17 per share.
Analysts expect Merck to post a profit, excluding one-time items, of 73 cents per share in the first quarter, according to Reuters Research. And they expect full-year earnings of $3.14 per share.
Merck has been spending millions of dollars to form partnerships and acquire products from biotechnology companies as it seeks to replenish a pipeline that has been depleted as its long-time best-sellers lose their patent protection.
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Last month it signed a seven-year partnership with Decode Genetics of Iceland under which Merck will gain access to Decode's population genetics. It also said it would buy privately-held Aton Pharma Inc. for an undisclosed sum to re-enter the market for cancer drugs.
In the same month Merck said it would pay an initial $70 million to Lundbeck for U.S. rights to a sleeping drug called gaboxadol that is in late-stage clinical trials.
Merck said on Thursday that the effects of the Aton Pharma purchase and the gain from the sale of the joint venture stake to J&J would be neutral to its earnings.
Shares of Merck (MRK: up $0.86 to $47.97, Research, Estimates) have fallen roughly 40 percent over the past three years as it posted essentially flat earnings in 2002 and 2003. The company has lost U.S. patent protection in the past few years on profitable drugs for cholesterol, hypertension and heartburn.
Meanwhile, sales of arthritis drug Vioxx have been struggling as physicians are wary of a clinical trial that suggested it had a slightly raised risk of heart attacks compared with a traditional painkiller.
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