By Bill Berkrot and Ransdell Pierson
NEW YORK (Reuters) - MERCK (MRK.NY)& Co
Its third-quarter net profit fell 28 percent, and its shares were off more than 3 percent.
"Our current sales trends for key products, compounded by known industry and emerging economic factors, have led us to reassess the environment in which we expect to be operating between now and 2010," Chief Executive Richard Clark said in a release.
The company expects compound annual earnings per share to grow in the mid-to-high single digits between 2005 and 2010. Merck withdrew its long-term forecast in July after setbacks for its Vytorin cholesterol drug, along with its earlier projections for double-digit increases in profit.
Merck said 6,800 employees will lose their jobs and another 400 vacancies will not be filled. Those cuts come on top of 10,400 jobs that were slashed in an earlier restructuring.
The global restructuring should result in cumulative savings of $3.8 billion to $4.2 billion from 2008 to 2013, the company said.
"The big take away is that Merck appears to be hitting a lot of setbacks and therefore causing its long-term growth to slow slightly," said Morningstar analyst Damien Conover.
"Not only are they having these setbacks with the current business, as we look forward to Merck over the next two years they're going to lose some major products to generic competition," he said, citing the high blood pressure drug Cozaar and the allergy medicine Singulair.
Merck said it earned $1.09 billion, or 51 cents per share, down from $1.53 billion, or 70 cents per share, a year ago.
Excluding 29 cents per share in restructuring charges, the drugmaker earned 80 cents per share, edging analysts' average expectations by a penny, according to Reuters Estimates.
The company said favorable foreign exchange rates contributed 4 percent to sales, although those trends have begun to reverse.
Vytorin troubles began after a study, called Enhance, questioned the effectiveness of the cholesterol treatment Vytorin it co-markets with Schering-Plough Corp
Adverse publicity from the two studies have hurt sales of Vytorin and Zetia, a cholesterol drug that is a component of the Vytorin combination pill.
Worldwide Vytorin sales were down 18 percent at $567 million for the quarter, while global Zetia sales were off 12 percent at $534 million.
In another setback, Merck said it will have to delay the launch of its new medicine, designed to raise good HDL cholesterol, in Europe and other markets due to a manufacturing-related issue.
The drug, to be sold under the brand name Tredaptive in Europe, has yet to be approved in the United States.
Merck's cervical cancer vaccine Gardasil saw sales fall 4 percent to $401 million.
The diabetes drug Januvia was a bright spot with sales doubling to $379 million for the quarter.
Merck said it now expects full-year earnings of $3.28 to $3.32 per share, excluding items. Analysts are estimating $3.28 per share.
Merck shares were off 3.2 percent at $29.02 in premarket trading.
(Editing by Derek Caney and Maureen Bavdek)
