Pharmaceutical sales took a 3% hit from currency exchange rates and total drug sales were down 5% from $8.89 billion to $8.45 billion. Sales of asthma drug Singulair were down 20% and of allergy drug Nasonex were down 19% as the loss of market exclusivity continues to hurt the top line. Merck’s best-performing pharmaceuticals were anti-inflammatory drug Remicade and diabetes treatment Januvia/Janumet, up 10% and 3%, respectively. The diabetes treatment is Merck’s top-selling product, with revenue in the quarter of $1.33 billion.
Gross margins fell from 62.9% in the year-ago quarter to 62.0%, primarily due to restructuring charges and acquisition costs. On a non-GAAP basis, the decline in gross margin reflects the impact product mix, partially offset by currency exchange rates that dropped to a negative impact of 2% on total sales.
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Merck reaffirmed its forecast for full-year 2014 adjusted EPS in a range of $3.35 to $3.53. The midpoint of that range, $3.44, is identical with the consensus estimate for this year’s EPS. Full-year revenues continued to be forecast at $42.4 to $43.2 billion, while the current consensus estimate is $42.94 billion.
The company’s CEO said:
Investing in the best opportunities for growth while being disciplined in managing our costs enabled us to deliver bottom-line performance. This is an exciting time as we prepare to commercialize the next wave of innovation coming out of Merck’s research labs over the next few years.
Merck is shopping its consumer products division, looking for a buyer willing to pay north of $10 billion for brands like Coppertone, Claritin, Dr. Scholl’s and other well-known over-the-counter products. Total revenue from consumer products reached $546 million, down 4% from a year ago. The company may also shed it animal health division, which produced revenue totaling $813 million in the first quarter, down 3% from the first quarter of last year.
Since the beginning of the year, Merck’s stock is up 14.5% and up 18.5% for the past 12 months. The company posted its 52-week high last week, but has given back about 2% since then.
Shares of Merck traded about 1.5% higher in Monday’s premarket, at $57.53 in a 52-week range of $44.60 to $58.32. Thomson Reuters had a consensus analyst price target of around $58.10 before the report.
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