Merck & Co., the No. 2 drugmaker in the U.S., reported its third quarter earnings Monday and revealed profits that beat analysts’ estimates even as revenues dipped. Here’s what else you need to know about.
What you need to know: Merck (MRK) posted a profit that beat analyst expectations even as the company’s revenues declined. The company was hurt by significantly lower sales of its Gardasil vaccine, which protects against cervical cancer.
However, Merck’s aggressive cost cutting has paid off, helping to boost profits amid sliding sales. The drugmaker has cut about jobs and reorganized its research operations to focus on more profitable innovation projects. CEO Kenneth Frazier said that the “multi-year initiative” is making “steady progress” in the company’s transformation.
The big number: Profit, excluding select items, was 90 cents a share, higher than analyst expectation of 88 cents a share. Sales declined 4.3% year-over-year to $10.56 billion. Analysts had expected Merck to post revenues of $10.65 billion.
Merck narrowed its earnings forecast for the year to $3.46 to $3.50 a share from a prior forecast of $3.43 to $3.53.
What you might have missed: Merck has been heavily investing in a new generation of drugs that use the body’s immune system to attack and destroy cancer tumors. One of these treatments, Keytruda, was approved by the U.S. Food and Drug Administration to treat melanoma in September and was awarded “breakthrough” status Monday for the treatment of a specific type of lung cancer.
This brings Keytruda one step closer to approval for these patients. Expansion of the immune-targeting drug could be a significant source of revenue for Merck. It will cost about $12,500 a month, and analysts estimate that sales could be as high as $1.8 billion by 2017.