Merck Announces Third-Quarter 2004 Earnings Per Share -EPS- of 60 Cents.WHITEHOUSE STATION, N.J. -- Merck & Co., Inc. (NYSE NYSE See: New York Stock Exchange : MRK MRK Merck & Company (stock symbol) MRK Mayer-Rokitansky-Kuster (anomaly) MRK Manual Remote Keying ): --Earnings Per Share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) of 60 Cents Includes Negative Impact of 25 Cents Associated with Voluntary Worldwide Withdrawal of VIOXX --Merck Anticipates Fourth-Quarter EPS of 48 to 53 Cents Including Effect of Withdrawal of VIOXX --Merck Anticipates Full-Year 2004 EPS Guidance of $2.59 to $2.64 Including Effect of Withdrawal of VIOXX --Merck/Schering-Plough Pharmaceuticals Launches VYTORIN in United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. --Head-to-Head Study Shows FOSAMAX Once Weekly Significantly Greater than Actonel Once-a-Week in Increasing Bone Mineral Density bone mineral density n. See bone density. bone mineral density A measurement of bone mass, expressed as the amount of mineral–in grams divided by the area scanned in cm2. See Bone densitometry. --Merck to Increase Supply of Pneumovax 23 (Pneumococcal Vaccine pneu·mo·coc·cal vaccine n. A vaccine containing purified capsular polysaccharide antigen from the most common infectious types of Streptococcus pneumoniae, used to immunize against pneumonococcal disease. Polyvalent polyvalent /poly·va·lent/ (-va´lent) multivalent. pol·y·va·lent adj. 1. Acting against or interacting with more than one kind of antigen, antibody, toxin, or microorganism. 2. ) by 11 Million Doses Merck & Co., Inc. today announced that earnings per share (EPS) for the third quarter of 2004 were $0.60, including a $0.25 unfavorable effect associated with the company's voluntary worldwide withdrawal of VIOXX. The unfavorable impact includes estimated customer returns of product previously sold, write-offs of inventory held by Merck and costs to undertake the withdrawal of the product. Net income was $1,325.6 million, including a $552.6 million unfavorable effect related to the withdrawal of VIOXX. Worldwide sales were $5.5 billion for the quarter, including a $491.6 million unfavorable effect related to the withdrawal of VIOXX. For the first nine months of 2004, earnings per share were $2.11, net income was $4,712.3 million and sales were $17.2 billion for the period. These amounts include the unfavorable effects described above associated with the withdrawal of VIOXX. Global sales performance includes a 2-point and 3-point favorable effect from foreign exchange for the third quarter and first nine months, respectively. "The voluntary withdrawal of VIOXX, with sales of $2.5 billion last year, represents a significant financial loss for us, but clearly was the right course of action," said Merck Chairman, President and Chief Executive Officer Raymond V. Gilmartin. Merck is redeploying research and development and marketing and sales personnel formerly dedicated to VIOXX to areas where additional growth opportunities exist, including other research programs, support of in-line products and upcoming product launches. "We look to the strong launch of VYTORIN and the five Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA compounds that we expect to file or launch by the end of 2006 to contribute to the company's future growth," added Mr. Gilmartin. In addition, the company will continue to drive down its cost structure through a number of initiatives already under way. In October 2003, Merck announced plans to eliminate 4,400 positions by the end of 2004. As of Sept. 30, approximately 4,500 positions had been eliminated, as the company identified additional opportunities to eliminate positions and reduce costs. Beginning in 2005, this action is expected to lower the company's annual payroll and benefit costs by approximately $250 to $300 million. "Going forward," Mr. Gilmartin said, "we will continue to look for additional opportunities to enhance efficiencies, as well as accelerate growth." Marketing and administrative expenses increased 20% compared to the third quarter of 2003, including the effect of $141 million for estimated costs related to the withdrawal of VIOXX and the impact of $34 million for restructuring costs related to previously announced position eliminations. Excluding these effects, marketing and administrative expenses for the third quarter increased 8% from the third quarter of 2003. Voluntary Withdrawal of VIOXX On Sept. 30, Merck announced a voluntary worldwide withdrawal of VIOXX, its arthritis and acute pain medication. The company's decision, which was effective immediately, was based on new three-year data from a prospective, randomized ran·dom·ize tr.v. ran·dom·ized, ran·dom·iz·ing, ran·dom·iz·es To make random in arrangement, especially in order to control the variables in an experiment. , placebo-controlled clinical trial, APPROVe (Adenomatous Polyp adenomatous polyp n. A polyp that consists of benign neoplastic tissue derived from glandular epithelium. adenomatous polyp Prevention on VIOXX). The trial, which was stopped, was designed to evaluate the efficacy of VIOXX 25 mg in preventing the recurrence of colorectal polyps Polyps A tumor with a small flap that attaches itself to the wall of various vascular organs such as the nose, uterus and rectum. Polyps bleed easily, and if they are suspected to be cancerous they should be surgically removed. in patients with a history of colorectal adenomas and to further assess the cardiovascular safety of VIOXX. In this study, there was an increased relative risk for confirmed cardiovascular events, such as heart attack and stroke, beginning after 18 months of treatment in the patients taking VIOXX compared to those taking placebo. The results for the first 18 months of the APPROVe study did not show any increased risk of confirmed cardiovascular events on VIOXX, and in this respect, are similar to the results of two placebo-controlled studies described in the most recent U.S. labeling for VIOXX. Merck presented data from APPROVe at the American College American College is the name of:
rheu·ma·tol·o·gy n. (ACR See riser card. ) Annual Scientific Meeting in San Antonio San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. on Oct. 18. The company had requested the opportunity to present the data at the ACR meeting. The company estimates that there were 105 million U.S. prescriptions written for VIOXX from May 1999 through August 2004. Based on this estimate, the company estimates that the number of patients who have taken VIOXX in the United States since its 1999 launch is approximately 20 million. The number of patients outside the United States who have taken VIOXX is undetermined at this time. Fourth-Quarter and Full-Year 2004 EPS Guidance Merck anticipates fourth-quarter EPS of $0.48 to $0.53, which includes the impact of approximately $700 to $750 million in foregone sales of VIOXX and potential additional fourth-quarter costs for the withdrawal of VIOXX. As a result, Merck anticipates full-year 2004 EPS guidance of $2.59 to $2.64, which includes the expectation that the impact of the withdrawal will negatively affect full-year EPS by $0.50 to $0.55. Please see pages 11-12 of this news release for a breakdown of Merck's full-year 2004 financial guidance. Pipeline Progress Research and development expenses increased 18% during the third quarter, reflecting Merck's ongoing commitment to both basic and clinical research, as well as the impact of the company's external collaborations, such as with DOV Pharmaceutical DOV Pharmaceutical, a biotechnology company, focuses on therapies primarily for central nervous system conditions. The firm's lead drug candidate, Indiplon, is said to treat insomnia. , Inc. and Nastech Pharmaceutical Company Inc. PROQUAD, a new childhood vaccine that adds chicken pox chicken pox or varicella (vâr'əsĕl`ə), infectious disease usually occurring in childhood. It is believed to be caused by the same herpesvirus that produces shingles. to the existing measles, mumps and rubella vaccine rubella vaccine See MMR vaccine. , and muraglitazar, the first-in-class dual PPAR PPAR Peroxisome Proliferator Activated Receptor PPAR Physical Partitions agonist agonist /ag·o·nist/ (ag´ah-nist) 1. one involved in a struggle or competition. 2. agonistic muscle. 3. for the treatment of type II diabetes Type II diabetes Type II diabetes is the most common form of diabetes and usually appears in middle aged adults. It is often associated with obesity and may be delayed or controlled with diet and exercise. Mentioned in: Diabetic Ketoacidosis in which Merck is in collaboration with Bristol-Myers Squibb Bristol-Myers Squibb (NYSE: BMY), colloquially referred to as BMS, is a pharmaceutical corporation, formed by a 1989 merger between pharmaceutical companies Bristol-Myers Company, founded in 1887 by William McLaren Bristol and John Ripley Myers in Clinton, NY (both were , are targeted for submission to the U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) in the fourth quarter. As previously announced, Merck intends to submit applications to the FDA for three investigational vaccines in the second half of 2005. The research and development programs for these investigational vaccines remain on track. The three vaccines are: ROTATEQ, a vaccine to protect against rotavirus rotavirus /ro·ta·vi·rus/ (ro´tah-vi?rus) any member of the genus Rotavirus. ro´taviral Rotavirus /Ro·ta·vi·rus/ (ro´tah-vi?rus , a highly contagious virus that causes gastroenteritis gastroenteritis: see enteritis. gastroenteritis Acute infectious syndrome of the stomach lining and intestines. Symptoms include diarrhea, vomiting, and abdominal cramps. and results in the hospitalization of nearly 50,000 children under 5 each year in the United States; a vaccine to reduce the incidence of human papillomavirus human papillomavirus (HPV), any of a family of more than 60 viruses that cause various growths, including plantar warts and genital warts, a sexually transmitted disease. Detectable warts can be or removed, usually by chemicals, freezing, or laser, but often recur. (HPV HPV human papillomavirus. HPV abbr. human papilloma virus Human papilloma virus (HPV) ) infection and the associated development of cervical cancer Cervical Cancer Definition Cervical cancer is a disease in which the cells of the cervix become abnormal and start to grow uncontrollably, forming tumors. - the second-leading cause of cancer deaths in women - and genital warts genital warts: see human papillomavirus. ; and a vaccine to reduce the pain that accompanies shingles shingles: see herpes zoster. shingles or herpes zoster Acute viral skin and nerve infection. Groups of small blisters appear along certain nerve segments, most often on the back, sometimes after a dull ache at the site; pain becomes , which afflicts 1 million American adults each year. Data from an investigational HPV vaccine Human papillomavirus (HPV) vaccine is a vaccine that targets certain sexually transmitted strains of human papillomavirus associated with the development of cervical cancer and genital warts.[1] Two HPV vaccines are currently on the market: Gardasil and Cervarix. studied by Merck will be presented in November at the Interscience Conference on Antimicrobial Agents and Chemotherapy Antimicrobial Agents and Chemotherapy (print-ISSN 0066-4804, CODEN AMACCQ; canceled ISSN 0074-9923, canceled CODEN AACHAX) is an academic journal published by the American Society for Microbiology. (ICAAC ICAAC Interscience Conference on Antimicrobial Agents and Chemotherapy ICAAC Iowa Community College Athletic Conference ). The vaccine used in this study was an investigational monovalent vaccine monovalent vaccine A vaccine containing one antigen. See Vaccine. intended to prevent infection by HPV type 16; it is a component of Merck's investigational quadrivalent quad·ri·va·lent adj. 1. Having four valences. 2. Having a valence of four; tetravalent. quadrivalent having a valence of four. HPV (types 6, 11, 16, 18) L1 VLP VLP Virus-like particles, see there vaccine. Merck continued to augment its internal research efforts with a comprehensive licensing and external alliance strategy across the entire spectrum of collaborations from early research to late-stage compounds, as well as new technologies and targeted acquisitions. During the first nine months of 2004, Merck executed 41 significant transactions, including research collaborations, pre-clinical and clinical compounds and technology transactions, as well as the acquisition of Aton Pharma, Inc. Merck has more than 40 opportunities currently in detailed review. For the full year of 2003, Merck completed 47 such transactions. In August, Merck and DOV DOV Data-Over-Voice DOV Degree of Variation DOV Defenders of Valor (gaming group) DOV Disbursing Officer Voucher DOV Director of Orbital Verification (Hubble Telescope) DOV Diaphragm-Operated Valve announced an agreement for the development and commercialization of DOV's novel triple-uptake inhibitors being developed for depression and related psychiatric disorders. Merck has licensed exclusive worldwide rights to DOV 21,947, which is in Phase I, for all therapeutic indications. In September, Merck and Nastech announced a global alliance to develop and commercialize Peptide YY Pancreatic Peptide YY3-36 is a peptide produced in the small intestine and colon that reduces appetite in response to feeding. Description Peptide YY3-36 3-36 Nasal Spray Nasal sprays are used for the nasal delivery of a drug or drugs, generally to alleviate cold or allergy symptoms such as nasal congestion. Although delivery methods vary, most nasal sprays function by instilling a fine mist into the nostril by action of a hand-operated pump (PYY PYY Peptide YY ), Nastech's product for the treatment of obesity, which is currently in Phase I development. The investigational PYY 3-36 Nasal Spray is designed to deliver the natural, appetite-regulating hormone PYY directly to the bloodstream. Product Performance Worldwide sales of SINGULAIR, a once-a-day oral medicine indicated for the treatment of chronic asthma and the relief of symptoms associated with seasonal allergic rhinitis seasonal allergic rhinitis, n See hay fever. seasonal allergic rhinitis Allergic rhinitis in which Sx wax and wane as a function of environmental pollen. See Allergic rhinitis. , reached $626 million in the third quarter, which was 2% higher than the third quarter of 2003. Sales in the third quarter of 2003 were favorably impacted by a $120 million buy-in. U.S. mail-order-adjusted prescription levels for SINGULAIR increased by approximately 18 percent for the quarter, as compared to the third quarter of 2003. Sales for the first nine months were $1.9 billion, a 26% increase over the comparable 2003 period. SINGULAIR continues to be the second-most-prescribed product in the overall respiratory market in the United States as patients, physicians and managed care organizations continue to recognize the value SINGULAIR offers to those who suffer from asthma or seasonal allergic rhinitis. FOSAMAX continued as the most-prescribed medicine worldwide for the treatment of postmenopausal post·men·o·paus·al adj. Of or occurring in the time following menopause. postmenopausal Change of life Gynecology adjective Referring to the time in ♀ when menstrual periods stop for ≥ 1 yr , male and glucocorticoid-induced osteoporosis. Global sales were strong, reaching $778 million during the quarter and $2.3 billion for the first nine months, representing growth of 13% and 15% over the respective periods of 2003. U.S. mail-order-adjusted prescription levels for FOSAMAX were in line with third-quarter 2003 levels. Results from the FOSAMAX Actonel Comparison Trial (FACT) were presented on Oct. 1 at the American Society of Bone Mineral Research meeting. This is the first head-to-head study comparing FDA-approved once-weekly osteoporosis treatments in postmenopausal women with osteoporosis conducted in the United States. FACT showed that FOSAMAX demonstrated significantly greater increases in bone mineral density (BMD BMD In currencies, this is the abbreviation for the Bermudian Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) and reductions in markers of bone-turnover than Actonel. FOSAMAX increased BMD 62 percent more than Actonel at the hip trochanter trochanter /tro·chan·ter/ (tro-kan´ter) a broad, flat process on the femur, at the upper end of its lateral surface (greater t.), or a short conical process on the posterior border of the base of its neck (lesser t.) . (hip bone), with similar tolerability. BMD is a major determinant of bone strength. The lower the BMD score the greater the risk of fracture. Global sales of Merck's antihypertensive antihypertensive /an·ti·hy·per·ten·sive/ (-ten´siv) counteracting high blood pressure, or an agent that does this. an·ti·hy·per·ten·sive adj. Reducing high blood pressure. n. medicines, COZAAR and HYZAAR*, were strong, reaching $706 million for the third quarter and $2.1 billion for the first nine months, representing growth of 14% and 15% over the respective periods in 2003. COZAAR is the second-most-frequently prescribed angiotensin II angiotensin II n. An octapeptide that is a potent vasopressor and a powerful stimulus for production and release of aldosterone from the adrenal cortex. antagonist (AIIA AIIA Australian Information Industry Association AIIA Australian Institute of International Affairs AIIA Associazione Italiana per l'Intelligenza Artificiale AIIA Associazione Italiana di Ingegneria Antincendio (Milan, Italy) ) in the United States and the largest-selling AIIA in Europe. U.S. mail-order-adjusted prescription levels for COZAAR and HYZAAR increased by approximately 4 percent for the quarter, as compared to the third quarter of 2003. Worldwide sales of ZOCOR, Merck's statin stat·in n. Any of a class of drugs that inhibit a key enzyme involved in the synthesis of cholesterol and promote receptor binding of LDL cholesterol, resulting in decreased levels of serum cholesterol. for modifying cholesterol, were $1.2 billion in the third quarter and $3.9 billion for the first nine months. Third-quarter ZOCOR performance includes an unfavorable comparison to 2003, which was affected by $110 million of wholesaler buy-in, resulting in a decline in sales of 13% from the same period in 2003. ZOCOR sales growth for the first nine months was 2% compared to the first nine months of 2003. U.S. mail-order-adjusted prescription levels for ZOCOR increased by approximately 2 percent for the quarter, as compared to the third quarter of 2003. Global sales of Merck's coxib, ARCOXIA, reached $61 million in the third quarter and $153 million for the first nine months. To date, ARCOXIA has been launched in 48 countries in Europe, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Asia. The goal PDUFA PDUFA Prescription Drug User Fee Act of 1992 (USA) (Prescription Drug User Fee Act The Prescription Drug User Fee Act (PDUFA) was a law passed by the United States Congress in 1992 which allowed the Food and Drug Administration (FDA) to collect fees from drug manufacturers to fund the new drug approval process. ) date for the New Drug Application (NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any ) for ARCOXIA is Oct. 30. For standard NDAs filed in 2003, FDA's goal is to review and act on 90 percent of NDAs within 10 months of filing. Merck cannot speculate on what action the FDA will take. * COZAAR and HYZAAR are registered trademarks of E.I. DuPont de Nemours & Company, Wilmington, Del. Sales of Merck's other promoted medicines and vaccines were $1.4 billion during the third quarter and $3.8 billion for the first nine months, representing 5% growth over each of the respective periods of 2003. These products treat or prevent a broad range of conditions, such as infectious disease Infectious disease A pathological condition spread among biological species. Infectious diseases, although varied in their effects, are always associated with viruses, bacteria, fungi, protozoa, multicellular parasites and aberrant proteins known as prions. , glaucoma glaucoma (glôkō`mə), ocular disorder characterized by pressure within the eyeball caused by an excessive amount of aqueous humor (the fluid substance filling the eyeball). , benign prostate enlargement and migraine. In support of the call to action issued on Oct. 19 by the U.S. Dept. of Health and Human Services Noun 1. Health and Human Services - the United States federal department that administers all federal programs dealing with health and welfare; created in 1979 Department of Health and Human Services, HHS that emphasizes the importance of pneumococcal vaccine, Merck is increasing its available supply of Pneumovax 23. Typically, Merck sells 6 to 7 million doses in the United States annually. The company is increasing its supply of Pneumovax 23 by 11 million doses. Global sales of ZETIA (branded EZETROL outside of the United States), the cholesterol-absorption inhibitor developed and marketed by Merck and Schering-Plough, reached $293 million in the third quarter and $725 million for the first nine months. U.S. prescription levels for ZETIA increased by approximately 70 percent for the quarter, as compared to the third quarter of 2003. In September, ZETIA accounted for approximately 6 percent of total prescriptions in the lipid-lowering market** and is now reimbursed for nearly 90 percent of all patients in managed care plans in the United States. To date, EZETROL has been launched in more than 40 countries outside of the United States and continues to show solid incremental growth. Worldwide sales of ZETIA have exceeded $1 billion since its 2002 launch. VYTORIN (marketed as INEGY in many countries outside of the United States), developed and marketed by Merck and Schering-Plough, was approved by the FDA on July 23, and has been recently launched in the United States. In the 12 weeks since the product was approved in the U.S., VYTORIN has already accounted for nearly 2 percent of new prescriptions in the U.S. lipid-lowering market***. Worldwide sales of VYTORIN were $52 million for the third quarter. In addition to the United States, VYTORIN has now been approved in 10 countries, including Argentina, Brazil, Germany and Mexico. VYTORIN is performing well in all markets. VYTORIN is the first single tablet to provide powerful LDL cholesterol LDL cholesterol n. See low-density lipoprotein. LDL Cholesterol Low-density lipoprotein cholesterol is the primary cholesterol molecule. High levels of LDL increase the risk of coronary heart disease. reduction through dual inhibition of the two sources of cholesterol by inhibiting the production of cholesterol in the liver and blocking absorption of cholesterol in the intestine, including cholesterol from food. In two separate clinical trials, VYTORIN provided greater reductions in LDL cholesterol than Lipitor or Zocor across the dosing ranges. ** Source: IMS (1) See IP Multimedia Subsystem. (2) (Information Management System) An early IBM hierarchical DBMS for IBM mainframes. IMS was widely implemented throughout the 1970s under MVS and continues to be used under z/OS. NPA (1) (Numbering Plan Area) The Bellcore/Telcordia telephone area code system in use in the U.S., Canada, Alaska, Hawaii and islands in the Caribbean. See NPA code. (2) (Network Professional Association, San Diego, CA, www.npanet. Plus Monthly Data ***Source: IMS NPA Plus 7 Weekly Data, week ended Oct. 8 VIOXX Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. As previously disclosed, federal and state personal injury lawsuits involving individual claims, as well as several putative class actions have been filed against the company with respect to VIOXX. As of Oct. 15, the company has been served or is aware that it has been named as a defendant in approximately 300 lawsuits, which include approximately 900 plaintiff groups alleging personal injuries resulting from the use of VIOXX. Certain of these lawsuits include allegations regarding gastrointestinal bleeding gastrointestinal bleeding Any hemorrhage into the GI tract lumen, from esophagus–eg, from ruptured esophageal varices, to anus–eg from hemorrhoids , cardiovascular events and kidney damage kidney damage Kidney injury Nephrology A structural or functional compromise in renal function due to external–eg, athletic, occupational, or other trauma, resulting in bruising or hemorrhage, which can be profuse and life threatening Etiology Vascular . The company has also been named as a defendant in several putative class actions seeking medical monitoring as a result of the putative class members' use of VIOXX. In addition, certain state court actions seek various remedies under state consumer fraud and fair business practice statutes, including recovering the cost of VIOXX purchased by individuals and third-party payors such as union health plans (all of the actions discussed in this paragraph are collectively referred to as the "VIOXX Personal Injury Lawsuits"). The actions filed in the state courts of California and New Jersey, respectively, have been transferred to a single judge in each state for coordinated proceedings. In addition, the Company expects to file a motion with the Judicial Panel on Multidistrict Litigation The Judicial Panel on Multidistrict Litigation is a special body within the United States federal court system, established by Congress in 1968, that has the power to transfer similar pending lawsuits brought in multiple districts to a single judge in a single jurisdiction. to transfer to a single federal judge and consolidate for pretrial pre·tri·al n. A proceeding held before an official trial, especially to clarify points of law and facts. adj. 1. Of or relating to a pretrial. 2. purposes all federal cases of a similar nature alleging personal injury and/or economic loss relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the purchase or use of VIOXX; several plaintiffs in certain VIOXX Personal Injury Lawsuits pending in federal court have made similar requests. As previously disclosed, in addition to the VIOXX Personal Injury Lawsuits, a number of purported class action lawsuits class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax also were filed in the third quarter of 2003 and the first quarter of 2004 by several individual shareholders in the United States District Court for the Eastern District of Louisiana The U.S. District Court for the Eastern District of Louisiana is a federal court in the 5th Circuit with facilities in New Orleans and Houma. The U.S. Attorney for the Eastern District of Louisiana represents the United States in civil and criminal litigation in the court. naming as defendants the company and several current or former officers of the company, and alleging that the defendants made false and misleading statements regarding VIOXX in violation of the federal securities laws (the "VIOXX Securities Lawsuits"). The plaintiffs request certification of a class of purchasers of the company's common stock between May 22, 1999 and Oct. 22, 2003, and seek unspecified compensatory damages A sum of money awarded in a civil action by a court to indemnify a person for the particular loss, detriment, or injury suffered as a result of the unlawful conduct of another. and the costs of suit, including attorney fees. After the announcement of the withdrawal of VIOXX, the company was named as a defendant in three additional purported securities class action lawsuits filed in federal courts in New Jersey and Pennsylvania. These later-filed actions request certification of a class of purchasers of company stock during various periods between Sept. 23, 2003 and Sept. 30, 2004. The allegations in the later-filed actions are similar to those in the earlier-filed actions, except that the later-filed actions also contain allegations relating to the withdrawal of VIOXX from the market. The company has been advised by the attorneys for the plaintiffs that the complaint on the earlier-filed consolidated actions will be amended to include allegations regarding the withdrawal of VIOXX and to extend the purported class period until Sept. 30, 2004. As previously disclosed, in March 2004, two shareholder derivative actions (the "VIOXX Derivative Lawsuits") were filed in the United States District Court for the Eastern District of Louisiana naming the company and certain members of the Board (past and present), together with certain executive officers, as defendants. The complaints arise out of substantially the same factual allegations that are made in the VIOXX-related federal securities putative class actions filed against the company, which principally allege that the company made false and misleading statements regarding VIOXX. The derivative suits, which are purportedly brought to assert rights of the company, assert claims against the Board members and officers for breach of fiduciary duty Noun 1. fiduciary duty - the legal duty of a fiduciary to act in the best interests of the beneficiary legal duty - acts which the law requires be done or forborne , waste of corporate assets and unjust enrichment A general equitable principle that no person should be allowed to profit at another's expense without making restitution for the reasonable value of any property, services, or other benefits that have been unfairly received and retained. . The court in the Eastern District of Louisiana The District of Louisiana or Louisiana District was an official United States government designation for the portion of the Louisiana Purchase that had not been organized into Orleans Territory. The area north of present-day Arkansas was also known as Upper Louisiana. has consolidated the shareholder derivative actions with the earlier-filed consolidated securities actions. In addition to these shareholder actions, since the announcement of the withdrawal of VIOXX, four putative class actions have been filed against the company, two in the United States District Court for the Eastern District of Louisiana and two in the United States District Court for the District of New Jersey The United States District Court for the District of New Jersey is the Federal district court whose jurisdiction is the state of New Jersey. It was established in 1789. New Jersey is the largest state by population to only have one District Court. The Honorable Garrett E. (the "VIOXX ERISA See Employee Retirement Income Security Act. ERISA See Employee Retirement Income Security Act (ERISA). Lawsuits" and, together with the VIOXX Securities Lawsuits and the VIOXX Derivative Lawsuits, the "VIOXX Shareholder Lawsuits") on behalf of certain of the company's current and former employees who are participants in certain of the company's retirement plans asserting claims under the Employee Retirement Income Security Act The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1001 et seq. (1974), is a federal law that sets minimum standards for most voluntarily established Pension and health plans in private industry to provide protection for individuals enrolled in these plans. ("ERISA"). The lawsuits make similar allegations to the allegations contained in the shareholder lawsuits described above. In addition to the lawsuits discussed above, the company has been named as a defendant in actions in various countries in Europe, Canada, Brazil and Israel related to VIOXX. The company has product liability insurance for claims brought in the VIOXX Personal Injury Lawsuits of up to approximately $630 million after deductibles and co-insurance. This insurance provides coverage for legal defense costs and potential damage amounts that have been or will be incurred in connection with the VIOXX Personal Injury Lawsuits. The company believes that this insurance coverage extends to additional VIOXX Personal Injury Lawsuits that may be filed in the future. Certain of the company's insurers have reserved their rights to take a contrary position with respect to certain coverage and there could be disputes with insurers about coverage matters. The company also has additional insurance with respect to the VIOXX Shareholder Lawsuits which it believes will apply to cover defense costs and losses, if any. The company is unable at this time to determine whether the company's insurance coverage with respect to the VIOXX Personal Injury Lawsuits and the VIOXX Shareholder Lawsuits (collectively, the "VIOXX Lawsuits") will be adequate to cover its defense costs and losses, if any. Based on media reports and other sources, the company anticipates that additional VIOXX Lawsuits will be filed against it and/or certain of its current and former officers and directors in the future. The company currently anticipates that one or more of the VIOXX Personal Injury Lawsuits may go to trial in the first half of 2005. The company cannot predict the timing of any trials with respect to the VIOXX Shareholder Lawsuits. The company believes that it has meritorious defenses to the VIOXX Lawsuits and will vigorously defend against them. In view of the inherent difficulty of predicting the outcome of litigation, particularly where there are many claimants and the claimants seek indeterminate damages, the company is unable to predict the outcome of these matters, and at this time cannot reasonably estimate the possible loss or range of loss with respect to the VIOXX Lawsuits. The company has not established any reserves for any potential liability relating to the VIOXX Lawsuits. A series of highly unfavorable outcomes could have a material adverse effect on the company's financial position, liquidity and results of operations. Additional Third-Quarter Activity On Aug. 20, the U.S. District Court for the District of New Jersey granted a motion by Merck, Medco Health Solutions Medco Health Solutions, Inc. (NYSE: MHS) is a leading pharmacy benefit manager (PBM) company based in Franklin Lakes, New Jersey. The current chairman is David Snow. The company formed in August 2003 as a spinoff from Merck & Co.. , Inc. and certain officers and directors to dismiss a shareholder derivative action involving claims related to Merck's revenue recognition practice for retail co-payments, as well as other allegations. The plaintiffs have appealed this decision. In addition, plaintiffs in a related purported class-action suit Noun 1. class-action suit - a lawsuit brought by a representative member of a large group of people on behalf of all members of the group class action have appealed the July 6 decision by the U.S. District Court for the District of New Jersey granting a motion to dismiss the class-action complaint with prejudice. Earnings Conference Call Investors are invited to a live Web cast of Merck's third-quarter earnings conference call today at 9 a.m. ET, by visiting the Newsroom section of Merck's Web site (www.merck.com/newsroom/webcast). Institutional investors and analysts can participate in the call by dialing (913) 981-5575. Journalists are invited to listen by dialing (913) 981-5571. The Web cast will be available for replay on the Web site until Oct. 28. About Merck Merck & Co., Inc. is a global research-driven pharmaceutical company. Merck discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health, directly and through its joint ventures. Forward-Looking Statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release, including the financial information that follows, contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this press release should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in the cautionary statements in Item 1 of Merck's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended Dec. 31, 2003, and in its periodic reports on Form 10-Q Form 10-Q See 10-Q. and Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. (if any) which the company incorporates by reference.
Merck Financial Guidance for 2004
Worldwide net sales will be driven by the company's major inline
products, including the impact of new studies and indications. Sales
forecasts for those products for 2004 are as follows:
WORLDWIDE
PRODUCT THERAPEUTIC CATEGORY 2004 NET SALES
----------- ----------------------- ---------------
ZOCOR Cholesterol modifying $4.9 to $5.1 billion
FOSAMAX Osteoporosis $3.0 to $3.2 billion
COZAAR/HYZAAR Hypertension $2.7 to $2.9 billion
SINGULAIR Asthma and Seasonal
Allergic Rhinitis $2.4 to $2.7 billion
--Under an agreement with AstraZeneca (AZN AZN Asian ), Merck receives revenue at predetermined pre·de·ter·mine v. pre·de·ter·mined, pre·de·ter·min·ing, pre·de·ter·mines v.tr. 1. To determine, decide, or establish in advance: rates on the U.S. sales of certain products by AZN, most notably PRILOSEC and NEXIUM. In 2004, Merck anticipates these revenues to be approximately $1.4 to $1.6 billion. --The income contribution related to the Merck and Schering-Plough collaboration is expected to be positive in 2004. Equity Income from Affiliates includes the results of the Merck and Schering-Plough collaboration combined with the results of Merck's other joint venture relationships. Equity Income from Affiliates is expected to be approximately $900 million to $1.0 billion for 2004. --Merck continues to expect that manufacturing productivity will offset inflation on product costs. --Product gross margin percentage is estimated to be approximately 74.5% to 75.5% for the fourth quarter of 2004 and 78% to 79% for the full year 2004 as a result of changes to the sales mix sales mix See product mix. . This guidance excludes adjustments related to the withdrawal of VIOXX. --Research and Development expense (which excludes joint ventures) is anticipated to increase at a high-teens percentage growth rate over the full-year 2003 level. This guidance includes acquired R&D expenses in 2003 and 2004. --Consolidated Marketing and Administrative expense is estimated to be at the same level as the full-year 2003 expense. This guidance excludes restructuring costs in 2003 and 2004 and excludes adjustments related to the withdrawal of VIOXX. --The consolidated 2004 tax rate is estimated to be approximately 28 to 29%. This guidance excludes adjustments related to the withdrawal of VIOXX. --Merck plans to continue its stock buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. program in 2004. As of Sept. 30, $8.8 billion remains under the current buyback authorizations approved by Merck's Board of Directors. --Approximately 4,500 positions had been eliminated as of Sept. 30, as the company identified additional opportunities to eliminate positions and reduce costs. This program, which was announced in October 2003, will be completed by the end of 2004. Restructuring costs for full-year 2004 are expected to be approximately $90 to $95 million. Given these guidance elements, Merck anticipates fourth-quarter EPS of $0.48 to $0.53, which includes the impact of approximately $700 to $750 million in foregone sales of VIOXX and potential additional fourth-quarter costs for the withdrawal of VIOXX. As a result, Merck anticipates full-year 2004 EPS guidance of $2.59 to $2.64, which includes the expectation that the impact of the withdrawal will negatively affect full-year EPS by $0.50 to $0.55. About Merck Merck & Co., Inc. is a global research-driven pharmaceutical company. Merck discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health, directly and through its joint ventures. Forward-Looking Statement This press release, including the financial information that follows, contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this press release should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in the cautionary statements in Item 1 of Merck's Form 10-K for the year ended Dec. 31, 2003, and in its periodic reports on Form 10-Q and Form 8-K (if any) which the company incorporates by reference.
The following table shows the financial results for Merck & Co., Inc.
and subsidiaries for the quarter ended Sept. 30, 2004, compared with
the corresponding period of the prior year.
Merck & Co., Inc.
Consolidated Results
(In Millions Except Earnings
per Common Share)
Quarter Ended Sept. 30
%
2004 2003 Change
---------------------------------
Sales $5,538.1 $5,762.0 -4%
Costs, Expenses and Other
Materials and production 1,364.2 1,083.4 26
Marketing and administrative (1) 1,752.9 1,463.6 20
Research and development (2) 919.3 776.5 18
Equity income from affiliates (307.1 ) (183.4 ) 67
Other (income) expense, net (4.2 ) 17.1 *
Income from Continuing Operations
Before Taxes ** 1,813.0 2,604.8 -30
Taxes on Income (3) 487.4 739.8
Income from Continuing Operations ** $1,325.6 $1,865.0 -29
Income from Discontinued Operations,
Net of Taxes -- (6.7 )
Net Income $1,325.6 $1,858.3 N/M
Average Shares Outstanding
Assuming Dilution 2,226.2 2,253.9
Earnings per Common Share
Assuming Dilution
Continuing Operations ** $0.60 $0.83 -28
Discontinued Operations -- (0.00 )
------------ ---------
Total $0.60 $0.82 (4) N/M
* (greater than) 100%
** Continuing operations exclude only the results from Medco Health
Solutions, Inc., which was spun off on Aug. 19, 2003
N/M Comparison not meaningful as a result of the spin-off of Medco
Health.
(1) 2004 Marketing and administrative expense includes $34 million for
restructuring costs.
(2) Research and development expense includes licensing expense for
research collaborations, including the initial payment of $35
million to DOV Pharmaceutical in the third quarter of 2004.
(3) The effective tax rate was 26.9% and 28.4% for the third quarter
of 2004 and 2003, respectively.
(4) Amount does not add as a result of rounding.
The following table shows the financial results for Merck & Co., Inc.
and subsidiaries for the quarter ended Sept. 30, 2004 and the line
item effect of adjustments related to the worldwide voluntary
withdrawal of VIOXX included in the financial results. The adjustments
include estimated customer returns of product previously sold,
write-offs of inventory held by Merck and costs to undertake the
withdrawal of the product.
Merck & Co., Inc.
Consolidated Results
(In Millions Except Earnings
per Common Share)
Quarter Ended Sept. 30
----------------------------
2004 VIOXX
(Including VIOXX Withdrawal
Withdrawal Impact) Impact
------------------- ------------
Sales $5,538.1 ($491.6 )
Costs, Expenses and Other
Materials and production 1,364.2 93.2
Marketing and administrative 1,752.9 141.4
Research and development 919.3
Equity income from affiliates (307.1 )
Other (income) expense, net (4.2 )
Income from Continuing Operations
Before Taxes 1,813.0 (726.2 )
Taxes on Income 487.4 (173.6 )
Net Income $1,325.6 ($552.6 )
Average Shares Outstanding
Assuming Dilution 2,226.2
Earnings per Common Share
Assuming Dilution $0.60 ($0.25 )
The following table shows the financial results for Merck & Co., Inc.
and subsidiaries for the nine months ended Sept. 30, 2004 compared
with the corresponding period of the prior year.
Merck & Co., Inc.
Consolidated Results
(In Millions Except Earnings
per Common Share)
Nine Months Ended Sept. 30
%
2004 2003 Change
------------------------------
Sales $17,190.7 $16,858.8 2%
Costs, Expenses and Other
Materials and production 3,676.2 3,209.7 15
Marketing and administrative (1) 4,980.5 4,567.5 9
Research and development (2) 2,901.6 2,373.6 22
Equity income from affiliates (722.3 ) (468.2 ) 54
Other (income) expense, net (240.0 ) (114.5 ) *
Income from Continuing Operations
Before Taxes ** 6,594.7 7,290.7 -10
Taxes on Income (3) 1,882.4 2,096.3
Income from Continuing Operations ** $4,712.3 $5,194.4 -9
Income from Discontinued Operations, Net
of Taxes -- 241.3
Net Income $4,712.3 $5,435.7 N/M
Average Shares Outstanding
Assuming Dilution 2,229.5 2,258.9
Earnings per Common Share
Assuming Dilution
Continuing Operations ** $2.11 $2.30 -8
Discontinued Operations -- 0.11
---------- ----------
Total $2.11 $2.41 N/M
* greater than 100%
** Continuing operations exclude only the results from Medco Health
Solutions, Inc., which was spun off on Aug. 19, 2003.
N/M Comparison not meaningful as a result of the spin-off of Medco
Health.
(1) 2004 Marketing and administrative expense includes $90 million for
restructuring costs.
(2) Research and development expense includes acquired research
expense of $125 million resulting from the acquisition of Aton
Pharma, Inc. in 2004 and $90 million associated with the increase
in ownership of Banyu Pharmaceutical Co. Ltd. in 2003. Research
and development expense also includes licensing expense for
research collaborations, including the initial payments of $70
million to Lundbeck in the first quarter of 2004, $100 million to
Bristol-Myers Squibb and $20 million to Vertex in the second
quarter of 2004, and $35 million to DOV Pharmaceutical in the
third quarter of 2004.
(3) The effective tax rate was 28.5% and 28.8% for the first nine
months of 2004 and 2003, respectively.
The following table shows the financial results for Merck & Co., Inc.
and subsidiaries for the nine months ended Sept. 30, 2004 and the line
item effect of adjustments related to the worldwide voluntary
withdrawal of VIOXX included in the financial results. The adjustments
include estimated customer returns of product previously sold,
write-offs of inventory held by Merck and costs to undertake the
withdrawal of the product.
Merck & Co., Inc.
Consolidated Results
(In Millions Except Earnings
per Common Share)
Nine Months Ended Sept. 30
--------------------------------
2004
(Including
VIOXX VIOXX
Withdrawal Withdrawal
Impact) Impact
----------------------
Sales $17,190.7 ($491.6 )
Costs, Expenses and Other
Materials and production 3,676.2 93.2
Marketing and administrative 4,980.5 141.4
Research and development 2,901.6
Equity income from affiliates (722.3 )
Other (income) expense, net (240.0 )
Income from Continuing Operations
Before Taxes 6,594.7 (726.2 )
Taxes on Income 1,882.4 (173.6 )
Net Income $4,712.3 ($552.6 )
Average Shares Outstanding
Assuming Dilution 2,229.5
Earnings per Common Share
Assuming Dilution $2.11 ($0.25 )
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