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Merck posts 14 % gain
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July 21, 1998: 9:21 a.m. ET
But drug maker's 2Q profit a penny shy of estimates; revenue up 9 %
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NEW YORK (CNNfn) - Merck & Co. said Tuesday its net income rose 14 percent in the second quarter as aggressive cost controls, increased productivity and stellar sales of the cholesterol-lowering drug Zocor helped offset inflation and weak foreign exchange.
Merck, a leading pharmaceutical researcher and developer based in Whitehouse Station, N.J., said second-quarter profit totaled $1.32 billion, or $1.07 a diluted share, up from $1.15 billion, or 93 cents a share, a year earlier.
While per-share earnings fell a penny shy of consensus estimates, sales revenues were up 9 percent from the year-ago period at $6.47 billion.
Merck said the divestiture of its crop protection business and the formation of the Merial joint venture in the third quarter of 1997 had slightly depressed sales growth in the first quarter and first half of 1998. After adjusting for these effects, the company said, sales grew 13 percent in both periods.
Foreign exchange reduced second-quarter sales growth by 2 percentage points, unchanged from a year ago. Without exchange, Merck's sales of human health products rose 10 percent in the first quarter and through the first 6 months of 1998.
Income growth was driven by strong unit volume gains in Zocor; Mevacor, another cholesterol-reducing drug; Fosamax, used to treat postmenopausal osteoporosis; and Crixivan, a protease inhibitor for H.I.V., the virus that causes AIDS.
Prescription volume growth in the Merck Medco Managed Care business added to the sales growth in the period, Merck said.
In the first half, net income rose to $2.48 billion, or $2.02 a diluted share, from $2.17 billion, or $1.75 a share, a year earlier. Revenue jumped to $12.53 billion from $11.48 billion. Sales outside the U.S. fell to 25 percent of total sales from 28 percent a year earlier.
Growth in pre-tax income in the first quarter and half was reduced, Merck said, by the company's share in tax increases associated with the Astra Merck joint venture, its European joint venture with Pasteur Mirieux Connaught, and the international operations of the Merial joint venture.
In June, Merck and Sweden's Astra AB said they had agreed to restructure their long-standing joint venture, Astra Merck Inc., under terms that will cede effective control of the partnership to the Swedish pharmaceutical firm while pumping greater revenues into Merck's development pipeline.
Shares of Merck (MRK) closed Monday up 3/8 at 138-3/8 on the New York Stock Exchange. 
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Merck
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