Summary
Merck & Co., Inc. (MRK) reported a decrease in net income for the second quarter and first six months of 2015 compared to the same periods in 2014. This decline was primarily driven by significant foreign exchange losses related to Venezuela and the absence of a substantial gain recognized in the prior year from AstraZeneca's option exercise. Revenue also saw a decrease, largely due to the divestitures of the Consumer Care business and certain ophthalmic products in 2014, as well as the termination of the AZLP relationship. Despite the overall decline in reported profits, the acquisition of Cubist Pharmaceuticals in January 2015 added $329 million in revenue for the quarter. The company's oncology franchise showed promise with Keytruda sales increasing and receiving regulatory approvals. However, several key products like Zetia, Vytorin, Remicade, and Singulair experienced sales declines due to factors such as loss of market exclusivity, generic competition, and unfavorable foreign exchange rates. Merck continues to manage its cost structure through ongoing restructuring programs and reported strong operational cash flow.
Financial Highlights
52 data points| Revenue | $9.79B |
| Cost of Revenue | $3.75B |
| Gross Profit | $6.03B |
| R&D Expenses | $1.67B |
| SG&A Expenses | $2.62B |
| Interest Expense | $174.00M |
| Net Income | $687.00M |
| EPS (Basic) | $0.24 |
| EPS (Diluted) | $0.24 |
| Shares Outstanding (Basic) | 2.83B |
| Shares Outstanding (Diluted) | 2.85B |
Key Highlights
- 1Net income attributable to Merck & Co., Inc. decreased significantly in both the second quarter ($687M vs $2,004M) and the first six months ($1,639M vs $3,709M) of 2015 compared to 2014, primarily due to foreign exchange losses and the absence of prior year gains.
- 2Worldwide sales decreased by 11% in Q2 2015 and 9% in the first six months of 2015 compared to the prior year, impacted by divestitures, foreign exchange, and the termination of the AZLP relationship.
- 3The acquisition of Cubist Pharmaceuticals for $8.3 billion in January 2015 contributed $329 million in sales during Q2 2015 and $537 million year-to-date.
- 4Keytruda, an oncology immunotherapy, showed strong growth with $110 million in sales for Q2 2015 and received regulatory approvals in the US and EU.
- 5Sales for several key products declined, including Zetia/Vytorin (-16% Q2), Remicade (-25% Q2), Singulair (-25% Q2), and PegIntron (-50% Q2), due to factors like loss of exclusivity, generic competition, and pricing pressures.
- 6The company continues to execute restructuring programs, incurring costs of $191M in Q2 2015 and $273M year-to-date, aimed at achieving significant annual cost savings.
- 7Operating cash flow remained strong, providing $4.9 billion in the first six months of 2015, supporting dividends and share repurchases.