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Merck & Co. announces 4Q results, job cuts
by Matthew Dennis February 16, 2010
Merck & Co. announced Tuesday alongside its fourth-quarter financial results that it plans to eliminate 15 000 jobs from its global workforce by 2012 as part of a restructuring programme that follows the acquisition of Schering-Plough. Quarterly net income was in line with analysts' estimates at $6.5 billion, up from $1.7 billion in 2008, due in part to a $7.5-billion pretax gain. "The new Merck is off to an excellent start," CEO Richard Clark commented.
In regards to workforce reductions, the drugmaker said it expects the first phase of the restructuring programme, which also includes the elimination of around 2500 vacant positions, to lead to annual savings of approximately $2.6 billion to $3.0 billion by 2012. Reductions in Merck's 100 000-strong workforce will mainly "come from the elimination of duplicative positions in sales, administrative and headquarters organisations," while a review of manufacturing and R&D facilities will be included in additional phases of the programme.
In results for the fourth quarter, total revenue climbed 67 percent, compared to the prior-year period, to $10.1 billion, which included around two months of sales attributable to Schering-Plough products, and which beat analysts' forecasts of $9.7 billion. Sales of Singulair rose 12 percent to $1.3 billion in the quarter, versus the comparable period, while combined revenue from Vytorin and Zetia was $1.2 billion, up from $1.1 billion.
Merck reported that combined quarterly revenue from Cozaar and Hyzaar increased 8 percent to $955 million versus the same time last year, while Januvia sales jumped 35 percent to $558 million. Revenue for Gardasil fell 3 percent to $277 million in the quarter, compared with the prior-year period. Clark noted that the "performance last quarter was characterised by strong growth in key brands and continued investment in our newest products."
For the full year, compared with 2008, the company posted a 64-percent increase in net income to $12.9 billion. Revenue totalled $27.4 billion, up 15 percent from the year before. The drugmaker reported that Singulair sales increased 7 percent to $4.7 billion, while combined revenue from Vytorin and Zetia reached $4.3 billion, down from $4.7 billion in 2008. Joint annual sales of Cozaar and Hyzaar were flat at $3.6 billion, although the company noted that it expects a "significant decline in future...sales" due to generic competition in both the US and Europe. For the 12-month period, Januvia revenue was $1.9 billion, up from $1.4 billion in the prior year, while Gardasil sales fell 20 percent to $1.1 billion.
Commenting on the results, Deutsche Bank analyst Barbara Ryan remarked that "the numbers look broadly speaking right in line... Everything looks good and on track." Analyst Seamus Fernandez of Leerink Swann added that "Merck delivered a solid fourth quarter... We believe [the] acquisition of Schering-Plough lowers Merck's risk profile."
Looking forward, the company confirmed its target of high single-digit earnings-per-share growth to 2013, and said that it will provide guidance for 2010 around the time of its first-quarter financial results in April.
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