Summary
Merck & Co., Inc. reported a 1% decrease in worldwide sales for the first quarter of 2016, amounting to $9.3 billion, compared to $9.4 billion in the prior year. This decline was partially attributed to a 4% unfavorable impact from foreign exchange rates and a significant reduction in operations in Venezuela. Despite the sales dip, net income attributable to Merck & Co., Inc. increased to $1.125 billion from $953 million in the prior year, leading to a rise in diluted earnings per share to $0.40 from $0.33. The company highlighted growth drivers such as Keytruda, Januvia/Janumet, and Zetia, while facing headwinds from declining sales of Remicade due to biosimilar competition and patent expiries for established products like Singulair and Cozaar. Financially, Merck maintained a strong liquidity position with $9.7 billion in cash and cash equivalents. The company also continued its share repurchase program, having repurchased $913 million worth of stock during the quarter. Significant events during the quarter included the acquisition of IOmet Pharma Ltd. for cancer research and the divestiture of U.S. marketing rights for Cortrophin and Corticotropin Zinc Hydroxide. The company also addressed ongoing litigation, notably reaching a settlement agreement for the Vioxx securities class action lawsuit for $830 million.
Financial Highlights
52 data points| Revenue | $9.31B |
| Cost of Revenue | $3.57B |
| Gross Profit | $5.74B |
| R&D Expenses | $1.66B |
| SG&A Expenses | $2.32B |
| Interest Expense | $172.00M |
| Net Income | $1.13B |
| EPS (Basic) | $0.41 |
| EPS (Diluted) | $0.40 |
| Shares Outstanding (Basic) | 2.77B |
| Shares Outstanding (Diluted) | 2.79B |
Key Highlights
- 1Total sales decreased by 1% to $9.3 billion year-over-year, impacted by a 4% unfavorable foreign exchange rate. Excluding FX, sales growth was driven by Keytruda, Januvia/Janumet, and Zetia.
- 2Net income attributable to Merck & Co., Inc. increased by 18.6% to $1.125 billion, resulting in diluted EPS of $0.40, up from $0.33 in the prior year.
- 3The company acquired IOmet Pharma Ltd. for $227 million to bolster its oncology pipeline, focusing on cancer immunotherapy and metabolism.
- 4Significant sales declines were noted for Remicade (-30%) due to biosimilar competition and for Singulair (-3%) and Cozaar/Hyzaar (-32%) as patents expire and generic competition intensifies.
- 5Keytruda sales showed strong growth, reaching $249 million, up significantly from $83 million in the prior year, driven by new indications and expanded market access.
- 6Merck maintained a robust liquidity position with $9.7 billion in cash and cash equivalents and $25.5 billion in cash and investments.
- 7The company reached a settlement for the Vioxx securities class action lawsuit for $830 million, with Merck's net cash payment estimated at $680 million after insurance proceeds.