Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):
Merck, Schering-Plough Results Get Boost From Cholesterol Drugs
Summary: Merck (NYSE:MRK) reported net income yesterday of $1.5 billion, or 69 cents a share, from $720.6 million, or 33 cents a share, a year earlier. Revenue totaled $5.77 billion, up 5.6% from $5.47 billion. In addition, Merck raised its full-year earnings forecast to $2.40-$2.48 a share, up eight cents from the forecast it issued in April. Estimates had been for revenue of $5.46 billion and EPS of $0.65. As a result, shares of Merck rose $1.59, or 4.3%, to $38.95, a 52-week high, in composite trading yesterday. In related pharma news, Schering-Plough (SGP) reported net income of $259 million, or 16 cents a share yesterday, compared with a year-earlier net loss of $48 million, or five cents a share. Total sales rose 11% to $2.82 billion from $2.53 billion. Estimates had been for revenue of $2.65 billion and EPS of $0.17. Shares of SGP rose more than 5% yesterday. Both companies' results were buoyed by brisk sales of Zetia and Vytorin, two cholesterol drugs Merck markets together with Schering-Plough. Merck said sales of the products increased 92% to $973 million. Sales of Zocor, for which Merck lost exclusivity June 23, fell 14% to $990 million. The sales of Merck's former cash cow are expected to plummet in the third quarter, as pharmacy-benefit managers shift patients to generic versions of the drug, and as Merck cuts costs to compete with them.
Comment on related stocks/ETFs: Consensus earnings estimates for Merck's next quarter are for just $0.49 a share -- the result of their loss of exclusivity for Zocor, the world's most prescribed cholesterol drug. For more on how Merck's loss can become Generic pharma Teva's (NYSE:TEVA) gain, see Yaser Anwar's FDA Approves Generic Zocor---The Implications for Merck.