Merck Announces Full-Year and Fourth-Quarter 2011 Financial Results

  • 2011 Full-Year Non-GAAP EPS of $3.77, Excluding Certain Items; GAAP EPS of $2.02; Fourth-Quarter Non-GAAP EPS of $0.97, Excluding Certain Items; GAAP EPS of $0.49
  • 2011 Full-Year Worldwide Sales Grew Four Percent to $48.0 Billion, Including Two Percent from Foreign Exchange; Fourth-Quarter Worldwide Sales Grew Two Percent to $12.3 Billion
  • Full-Year and Fourth-Quarter Double-Digit Global Growth for JANUVIA, JANUMET, ISENTRESS and GARDASIL
  • Company plans to file five major products for approval between 2012 and 2013
  • 2012 Full-Year Non-GAAP EPS Target of $3.75 to $3.85, Excluding Certain Items; GAAP EPS Range of $2.04 to $2.30

WHITEHOUSE STATION, N.J.--(BUSINESS WIRE)--Feb 2, 2012 - Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the fourth quarter and full year of 2011.

     
$ in millions, except EPS amounts   Fourth
Quarter
2011

 

  Fourth
Quarter
2010

 

  Year Ended
Dec. 31,
2011

 

  Year Ended
Dec. 31,
2010

 

Sales   $12,294   $12,094   $48,047   $45,987
GAAP EPS   0.49   (0.17)   2.02   0.28
Non-GAAP EPS that excludes items listed below1

 

  0.97   0.88   3.77   3.42
GAAP Net Income (Loss)2

 

  1,512   (531)   6,272   861
Non-GAAP Net Income that excludes items listed below 1,2

 

  2,978   2,756   11,697   10,715
Non-GAAP (generally accepted accounting principles) earnings per share (EPS) for the fourth quarter of $0.97 and $3.77 for the full year of 2011 exclude acquisition-related costs, restructuring costs and certain other items.

A reconciliation of GAAP to non-GAAP net income (loss) and EPS is provided in the tables that follow.

     
    Fourth Quarter 2011   Fourth Quarter 2010
$ in millions, except EPS amounts   Net
Income 2

 

   

EPS

 

  Net
(Loss)
Income2

 

   

EPS

 

GAAP   $1,512   $0.49   $(531)   $(0.17)
Difference   1,466   0.483

 

  3,287   1.053
Non-GAAP that excludes items listed below   $2,978   $0.97   $2,756   $0.88
                 
     
    Year Ended
Dec. 31, 2011

 

  Year Ended
Dec. 31, 2010

 

$ in millions, except EPS amounts   Net
Income2

 

  EPS

 

  Net
Income2

 

  EPS

 

GAAP   $6,272   $2.02   $861   $0.28
Difference   5,425   1.753   9,854   3.143
Non-GAAP that excludes items listed below   $11,697   $3.77   $10,715   $3.42
                 
     
$ in millions   Fourth
Quarter
2011

 

  Fourth
Quarter
2010

 

  Year Ended
Dec. 31, 2011

 

  Year Ended
Dec. 31, 2010

 

Acquisition-related costs4

 

  $1,479   $3,591   $5,939   $9,403
Restructuring costs   692   354   1,911   1,986
Arbitration settlement charge       500  
Legal reserve         950
Gain on AstraZeneca's asset option exercise         (443)
Other5

 

  6     (258)  
Net decrease (increase) in income before taxes   2,177   3,945   8,092   11,896
Income tax (benefit) expense6

 

  (711)   (658)   (2,667)   (2,042)
Decrease (increase) in net income   $1,466   $3,287   $5,425   $9,854
"We are positioning Merck to perform well by advancing and growing our innovative pipeline, meeting the evolving needs of customers around the world and achieving a more efficient operating model," said Kenneth C. Frazier, chairman and chief executive officer of Merck. "We closed out 2011 with a high-quality fourth quarter by growing the top and bottom lines. Our overall performance for the year confirms our ability to achieve strong operating results while investing for the longer term. As we begin 2012 and look ahead, we are optimistic about our underlying business, our current momentum and the early success of our strategy."

Select Revenue Highlights

Full-year 2011 worldwide sales were $48.0 billion, an increase of 4 percent, which includes a 2 percent benefit from foreign exchange, compared to full-year 2010. Worldwide sales were $12.3 billion for the fourth quarter of 2011, an increase of 2 percent compared with the fourth quarter of 2010. The revenue increases largely reflect strong sales of JANUVIA (sitagliptin), SINGULAIR (montelukast sodium), JANUMET (sitagliptin/metformin hydrochloride), ISENTRESS (raltegravir) and GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant].

Sales from emerging markets accounted for approximately 18 percent of pharmaceutical sales for the full year and 17 percent in the fourth quarter. China grew 37 percent for the full year and continues to be a key driver of growth in the emerging markets.

The table below reflects sales of the company's top Pharmaceutical products, as well as total sales of Animal Health and Consumer Care products.

     
 

$ in millions

 

  Fourth
Quarter
2011

 

  Fourth
Quarter
2010

 

   

 

Change

 

  Year Ended Dec. 31,

2011

 

  Year Ended Dec. 31,

2010

 

   

 

Change

 

Total Sales   $12,294   $12,094   2%   $48,047   $45,987   4%
Pharmaceutical7

 

  10,755   10,441   3%   41,289   39,267   5%
SINGULAIR   1,461   1,349   8%   5,479   4,987   10%
JANUVIA   960   675   42%   3,324   2,385   39%
REMICADE   511   710   -28%   2,667   2,714   -2%
ZETIA   640   629   2%   2,428   2,297   6%
VYTORIN   475   562   -16%   1,882   2,014   -7%
COZAAR/HYZAAR   427   415   3%   1,663   2,104   -21%
JANUMET   386   288   34%   1,363   954   43%
ISENTRESS   387   313   24%   1,359   1,090   25%
NASONEX   325   303   7%   1,286   1,219   5%
GARDASIL   274   221   24%   1,209   988   22%
PROQUAD, M-M-R II and VARIVAX   276   285   -3%   1,202   1,378   -13%
Animal Health   868   815   6%   3,253   2,941   11%
Consumer Care 7

 

  361   381   -5%   1,840   1,823   1%
Other Revenues8

 

  310   457   -32%   1,666   1,956   -15%
Worldwide sales of the combined diabetes franchise of JANUVIA/JANUMET grew 40 percent to $1.3 billion in the fourth quarter of 2011 driven by growth in all regions. The combined JANUVIA/JANUMET franchise had sales of $4.7 billion for the full year of 2011, an increase of 40 percent.

Worldwide sales of SINGULAIR, a once-a-day oral medicine indicated for the chronic treatment of asthma and the relief of symptoms of allergic rhinitis, grew 8 percent from the fourth quarter of 2010 to $1.5 billion. Full-year worldwide sales for SINGULAIR were $5.5 billion, a 10 percent increase compared with the prior year. The U.S. patent for SINGULAIR will expire in Aug. 2012, and the company expects a significant decline in sales following expiry.

Global sales of REMICADE (infliximab) and SIMPONI (golimumab), treatments for inflammatory diseases, for the full year of 2011 increased 4 percent and declined 24 percent for the fourth quarter. In territories retained, the combined sales of REMICADE and SIMPONI grew 21 percent for the full year and 8 percent for the fourth quarter of 2011. In July 2011, the company transferred exclusive marketing rights for REMICADE and SIMPONI to Johnson & Johnson in Canada, Central and South America, the Middle East, Africa and Asia Pacific. Merck retained exclusive marketing rights in Europe, Russia and Turkey.

ISENTRESS, an HIV integrase inhibitor for use in combination with other antiretroviral agents for the treatment of HIV-1 infection in adults, children and adolescents 2 years of age and older and weighing at least 10 kg, grew 24 percent in the fourth quarter. Global sales of ISENTRESS for the full year of 2011 were $1.4 billion, a 25 percent increase compared with the prior year.

Sales of GARDASIL, a vaccine to help prevent certain diseases caused by four types of human papillomavirus (HPV), were $274 million, an increase of 24 percent for the quarter driven by increased vaccination of males ages 9 through 26. Worldwide sales of GARDASIL for the year were $1.2 billion, a 22 percent increase compared with the prior year.

Sales of VICTRELIS (boceprevir), the company's oral hepatitis C virus NS3/4A protease inhibitor, were $87 million in the quarter and $140 million for the full year of 2011. In addition to the United States, the company has recently launched VICTRELIS in 19 markets including France, Germany, Canada and Brazil.

Sales of ZOSTAVAX (Zoster Vaccine Live) were $78 million in the quarter. Global sales of ZOSTAVAX for the full year of 2011 were $332 million, a 37 percent increase compared with the prior year due to an improved supply status. The company recently filled all back orders and resumed a normal supply schedule in the United States.

As expected, global sales of Merck's antihypertensive medicines COZAAR (losartan potassium) and HYZAAR (losartan potassium and hydrochlorothiazide) declined for the full year of 2011 following loss of marketing exclusivity in the United States and in major European markets in 2010.

Product Performance – Animal Health

Merck Animal Health sales totaled $868 million for the fourth quarter of 2011, a 6 percent increase over the same period last year. Animal Health had strong fourth-quarter performance across most regions, with growth primarily led by increased sales of swine, poultry and companion animal products. The division's products include pharmaceutical and vaccine products for the prevention, treatment and control of disease in all major farm and companion animal species. Animal Health global sales for 2011 full year were $3.3 billion, an 11 percent increase, which includes a 3 percent benefit from foreign exchange, compared with the prior year.

Product Performance – Consumer Care

2011 full-year global sales of Consumer Care were $1.8 billion, a 1 percent increase compared to full-year 2010. Fourth-quarter global sales were $361 million, a decrease of 5 percent compared to the fourth quarter of 2010. The sales decrease was primarily due to declines in CLARITIN and COPPERTONE. Despite competition, CLARITIN continues to maintain a leadership position in the over-the-counter allergy market.

Fourth-Quarter and Full-Year Expense and Other Information

The costs detailed below totaled $10.8 billion on a GAAP basis during the fourth quarter of 2011 and include $2.2 billion of acquisition-related costs and restructuring costs.

     
$ in millions   Included in the expense for the period
Fourth Quarter 2011    

GAAP

 

  Acquisition-
Related
Costs 4

 

  Restructuring
Costs

 

  Certain Other
Items

 

   

Non-GAAP1

 

Materials and production   $4,176   $1,212   $68   $7   $2,889
Marketing and administrative   3,704   86   42     3,576
Research and development   2,419   244   49     2,126
Restructuring costs   533   –-   533    
 
Fourth Quarter 2010                    
Materials and production   $4,440   $1,206   $105   $ –   $3,129
Marketing and administrative   3,537   160   13     3,364
Research and development   4,559   2,225   115     2,219
Restructuring costs   121     121    
The costs detailed below totaled $40.4 billion on a GAAP basis for full-year 2011 and include $7.9 billion of acquisition-related costs and restructuring costs.
     
$ in millions   Included in the expense for the period
Full Year 2011   GAAP

 

  Acquisition-
Related
Costs4

 

  Restructuring
Costs

 

  Certain Other
Items

 

   

Non-GAAP1

 

Materials and production   $16,871   $5,137   $348   $7   $11,379
Marketing and administrative   13,733   278   119     13,336
Research and development   8,467   587   138     7,742
Restructuring costs   1,306     1,306    
 
Full Year 2010                    
Materials and production   $18,396   $6,566   $430   $ –   $11,400
Marketing and administrative                  

Posted: February 2012


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