Merck outperforms second-quarter expectations as earnings surge
- Merck’s net income in Q2 2014 was $2.03 billion -- more than double its $906 million haul in Q2 2013.
- Earnings were $0.85/share, compared with forecasted earnings of $0.81/share.
- Earnings were bolstered by a one-time $741 million gain from a sale to AstraZeneca, and flattened somewhat by a 21% decline in sales of Nasonex (mometasone) due to generic competition.
Merck’s second-quarter earnings were up, thanks in part to AstraZeneca buying out Merck’s interests in Nexium (esomeprazole) and Prilosec (omeprazole) for $741 million. Generic competition dampened overall performance, while branded sales of Merck’s type 2 diabetes drugs were up appreciably.
Merck plans to reinvest in areas with high-growth potential and focus more on domestic acquisitions. Kenneth Frazier, CEO of Merck, said, “We delivered a strong first half of the year, making progress in transforming our operating model, fueling innovation and managing costs.”
As Bloomberg News' Caroline Chen points out, Merck's strategy of remaining in the U.S. while focusing on acquisitions and expanding its drug portfolio stands in stark contrast to its rival Pfizer's attempts to relocate overseas with a takeover of London-based AstraZeneca. Frazier told Chen that instead of undergoing a complex and time-consuming tax-inversion merger, Merck would rather encourage domestic tax reform by getting Congress to "to look at how all U.S. firms are at a huge disadvantage" on taxes.
- Pharma Times Merck & Co sees Q2 profit rocket
- Bloomberg News Merck CEO seeks drug add-ons, not large tax-inversion deals