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BRISTOL-MYERS SQUIBB COMPANY

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Merck gives cautious 2016 outlook as sales of top medicines lag

02/03/2016 | 12:41pm EDT
A view of the Merck & Co. campus in Linden, New Jersey

(Reuters) - Merck & Co Inc (>> Merck & Co., Inc.) on Wednesday issued a cautious 2016 outlook and reported disappointing fourth-quarter sales of its Januvia diabetes treatment and its Remicade arthritis drug, sending its shares down nearly 3 percent.

(Reuters) - Merck & Co Inc (>> Merck & Co., Inc.) on Wednesday issued a cautious 2016 outlook and reported disappointing fourth-quarter sales of its Januvia diabetes treatment and its Remicade arthritis drug, sending its shares down nearly 3 percent.

Sales of Januvia and a related drug called Janumet, the company's biggest franchise, fell 12 percent to $1.45 billion. Merck said wholesalers had stocked up in the prior quarter, and the products face growing competition from other oral diabetes treatments.

But Adam Schechter, the company's head of global human health, said Januvia sales should increase this year, excluding the effects of a stronger dollar, which reduces the value of revenue from overseas.

Januvia sales did not suffer after recent data showed Eli Lilly & Co's (>> Eli Lilly and Co) rival Jardiance drug sharply reduced deaths among diabetics at risk of heart attack, Schechter said.

Sales of Remicade, which is facing competition outside the United States from cheaper biosimilars, dropped 29 percent to $396 million. In a conference call with analysts, Schechter said the drug's market share was shrinking, and the trend would accelerate.

"Our initial read on the earnings and guidance reaffirms our neutral stance on (Merck) as pressure on key products such as Januvia and Remicade will likely limit near-term growth," Credit Suisse analyst Vamil Divan said.

Merck is counting on Keytruda, a recently approved treatment for melanoma and lung cancer, to boost its earnings for years to come. The medicine, which takes the brakes off the immune system, is competing with Bristol-Myers Squibb Co's (>> Bristol-Myers Squibb Co) similar Opdivo treatment, which is picking up sales faster.

Keytruda sales rose to $214 million in the fourth quarter, about half Opdivo's $475 million in revenue in that period.

Merck, the second-largest U.S. drugmaker behind Pfizer Inc (>> Pfizer Inc.), forecast full-year earnings of $3.60 to $3.75 per share, excluding special items. The analysts' average estimate was $3.72, according to Thomson Reuters I/B/E/S.

Merck said it expected 2016 revenue of $38.7 billion to $40.2 billion. Wall Street had forecast $40.25 billion.

Fourth-quarter revenue fell 3 percent to $10.22 billion, below analysts' expectations of $10.35 billion. Sales would have risen 4 percent if not for the stronger dollar.

Net income fell to $976 million from $7.32 billion.

Excluding costs from last year's acquisition of Cubist Pharmaceuticals and other special items, earnings of 93 cents per share topped Wall Street's forecast of 91 cents. Analysts largely attributed the profit beat to a lower tax rate.

(Additional reporting by Amrutha Penumudi in Bengaluru; Editing by Lisa Von Ahn)

By Ransdell Pierson


© Reuters 2016
Stocks mentioned in the article
ChangeLast1st jan.
BRISTOL-MYERS SQUIBB COMPANY 0.56% 68.34 Delayed Quote.10.17%
ELI LILLY AND COMPANY 2.37% 244.15 Delayed Quote.44.60%
LABORATORY CORPORATION OF AMERICA HOLDINGS 0.95% 283.77 Delayed Quote.39.41%
MERCK & CO., INC. 1.32% 77.54 Delayed Quote.-5.21%
PFIZER, INC. 0.51% 41.68 Delayed Quote.13.23%
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Financials (USD)
Sales 2021 46 031 M - -
Net income 2021 7 797 M - -
Net Debt 2021 28 265 M - -
P/E ratio 2021 20,1x
Yield 2021 2,84%
Capitalization 153 B 153 B -
EV / Sales 2021 3,93x
EV / Sales 2022 3,50x
Nbr of Employees 30 250
Free-Float 76,3%
Chart BRISTOL-MYERS SQUIBB COMPANY
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Bristol-Myers Squibb Company Technical Analysis Chart | BMY | US1101221083 | MarketScreener
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Mean consensus OUTPERFORM
Number of Analysts 21
Last Close Price 68,34 $
Average target price 75,18 $
Spread / Average Target 10,0%
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Managers and Directors
Giovanni Caforio Chairman & Chief Executive Officer
David V. Elkins Chief Financial Officer & Executive Vice President
Paul von Autenried Chief Information Officer & Executive VP
Rupert J. Vessey Executive VP-Research & Early Development
Joseph E. Eid Senior VP & Head-Global Medical Affairs
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