Earnings season continues with a couple of biggies: Merck unveiled profits that suffered from merger-and-restructuring charges, and Amgen reported street-beating earnings despite some sales declines. Meanwhile, two Japanese drugmakers posted mixed results. Here are the highlights:

• Merck reported a 52 percent decline in second-quarter profit, as merger-related and restructuring costs more than offset a near doubling in sales as a result of its takeover of Schering-Plough. But without those one-time charges, profits actually grew, beating analysts’ estimates. The company’s biggest drug, Singulair, posted flat sales of $1.26 billion, while the newly-off-patent blood-pressure drugs Cozaar and Hyzaar saw revenues drop 46 percent to $485 million.

• Amgen posted better-than-expected Q2 earnings, but lost ground on some of its most important drugs. The anemia drug Aranesp lost 13 percent of its sales, which came in at $603 million; Enbrel sales fell two percent to $877 million. But as Reuters points out, investors were looking past this quarter’s numbers, counting on the newly launched Prolia to give Amgen a new boost.

• Daiichi Sankyo said it might boost its annual outlook after quarterly profit skyrocketed, aided by a turnaround at its Indian subsidiary Ranbaxy Laboratories. Profits grew to $808 million, almost ten times what they were a year earlier.

• Takeda Pharmaceutical took a big hit from the loss of patent protection on the ulcer treatment Prevacid. Profits fell by one-fourth to $1.2 billion, and the company stuck to its lower-than-last-year forecast for 2010.

Source: FiercePharma

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The Associated Press has put out a helpful list of Merck’s top-selling drugs for the fourth quarter, now that it has merged with Schering-Plough. So we thought we’d take a look at the other megamerger–Pfizer and Wyeth–and Merck’s list, too. The names on both lists are familiar, and you’ll notice that each list includes some drugs brought in by the respective mergers. Here’s Pfizer’s list to start:

• Lipitor, cholesterol drug, $3.175 billion, a 1 percent increase over the same period last year;
• Lyrica, for fibromyalgia and nerve pain, $820 million, a 17 percent increase;
• Celebrex, an arthritis pain drug, $669 million, up 1 percent;
• Viagra, erectile dysfunction, $549 million, up 9 percent;
• Xalatan/Xalacom, eye pressure, $499 million, up 10 percent;
• Norvasc, for high blood pressure, $486 million, down 10 percent;
• Zyvox, antibiotic, $330 million, up 16 percent;
• Detrol/Detrol LA, overactive bladder, $309 million, down 1 percent;
• Sutent, cancer treatment, $293 million, up 33 percent; and
• Geodon/Zeldox, antipsychotics, $289 million, up 5 percent.                 Now, here’s the Merck version, from the AP (percentages ours):
• Singulair, Asthma/Allergies, $1.26 billion, up more than 12 percent;
• Cozaar/Hyzaar, high blood pressure, $955 million, up about 8 percent;
• Januvia/Janumet, diabetes, $760 million, up close to 43 percent;
• Remicade, rheumatoid arthritis, $635 million, up about 29 percent;
• Zetia, cholesterol, $614 million, up 10 percent;
• Vytorin, cholesterol, $577 million, up roughly 2 percent;
• Temodar, cancer treatment, $292 million, up close to 21 percent;
• Nasonex, allergies, $286 million, up about 2 percent;
• Fosamax, osteoporosis, $285 million, down 10 percent; and
• Gardasil, HPV vaccine, $277 million, down 3 percent.

Source: FiercePharma

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AstraZeneca, Eli Lilly and Bristol-Myers Squibb will be facing the biggest patent losses over the next few years, according to a report by Bernstein Research analyst Dr. Tim Anderson. He predicts the results of generic competition could have an even bigger impact on Pharma’s bottom line than Wall Street expects. That’s because companies rarely disclose their biggest drugs’ pre-tax income, making it hard for industry watchers to accurately judge how significant the revenue loss will be.

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“Our work yields a very important finding: just how much a small collection of major brands can fund the operations of the rest of the company, and how they enable things like the heavy investment in research and development, and other expensive endeavors,” says Anderson, as quoted in Reuters. “What, then, will happen as these sources of funding dry up?” For example, he estimates that Plavix’s contribution to BMS’s pre-tax income will plummet from $2.93 billion in 2009 to $156 million in 2015. Likewise, he sees Lilly’s Zyprexa dropping to $518 million in 2015 from $3.81 billion in 2009.

Anderson adds that while companies like Pfizer and Merck are also facing patent losses (on Lipitor and Singulair, respectively), they’ve done a better job of preparing their business for the impending revenue loss.

Source: FiercePharma

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The FDA requested that the labelling for leukotriene modifiers be updated to include a precaution about the potential for neuropsychiatric events in patients taking the asthma drugs. The request follows the agency’s review of such events, which have been reported in some patients taking Merck & Co.’s Singulair (montelukast), AstraZeneca’s Accolate (zafirlukast) and Cornerstone Therapeutics’ Zyflo and Zyflo CR (zileuton).

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In its safety update, the FDA noted that the side effects associated with the asthma drugs include agitation, aggression, suicidal behaviour, depression, insomnia and irritability.

In response to the request, Merck stated that Singulair’s label already contains post-marketing information about the neuropsychiatric events addressed in the agency’s communication, and added that it “will continue to work with the FDA to revise the prescribing information for Singulair in the US to include a precaution related to those events.”

Source: FirstWord

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The FDA granted tentative approval to Mylan’s generic version of one dosage of Merck & Co.’s Singulair (montelukast), the generic drugmaker reported.

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US sales of the branded product were $2.6 billion in the 12-month period that ended March 31, according to Mylan. The drug, a treatment for allergies and asthma, is expected to lose patent protection in 2012.

Source: FirstWord

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Now is the winter of Wall Street’s discontent made glorious summer — or, at least, a little less grim — by the deals of pharma.

Today’s news that Roche and Genentech have reached an agreement marks the third supersize pharma deal so far this year. Add up the announced values — Pfizer/Wyeth at $68 billion, Merck/Schering-Plough at $41.1 billion and Roche/Genentech at $46.8 billion — and you get $155.9 billion, a pretty astonishing sum at a moment when mattresses around the world are bulging with what little cash people have left.

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The deals are a reminder that the drug business is worlds apart from the financial industry that led the rise and fall of the broader market. Big pharma companies have strong balance sheets, real products and lots of cash. The bond markets seem ready to finance the industry.

At the same time, the deals are a reminder of the looming issues facing the industry. Companies face expiring patents on key drugs — probably 2011 for Pfizer’s Lipitor and 2012 for Merck’s Singulair — and feel a need to diversify beyond the increasingly difficult business of selling branded pills. So, rich with cash and good credit, they’re looking to buy their way out of trouble.

Bonus Buy: Gilead, known for its HIV drugs, has agreed to pay $1.4 billion to acquire CV Therapeutics, which makes most of its money from an angina drug.

Source: The Wall Street Journal

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Merck, long resistant to large-scale pharmaceutical mergers, is finally taking the plunge with a $41.1 billion deal for Schering-Plough.

A tie-up between the two companies is a logical fit, because they have a long-standing relationship co-marketing cholesterol drugs Vytorin and Zetia. And there’s been wide speculation that Pfizer’s $68 billion deal for Wyeth would touch off a new round of big pharmaceutical deals.

Both Merck and Schering-Plough, like many other Big Pharma players, have run been running into troubles lately. Merck last year saw sales of major products such as allergy-drug Singulair and cervical-cancer vaccine Gardasil weaken. And the FDA refused to approve Merck’s cholesterol drug Cordaptive. Just last month, CEO Dick Clark hinted that a large-scale acquisition might be coming.

Schering-Plough, heavily dependent on sales of Vytorin, saw the drug take a significant hit last year amid controversy over a clinical trial. And Schering-Plough too has run into its own trouble winning approval of new drugs.

One of the most attractive assets Schering-Plough brings to the table for Merck is an anti-clotting drug in its pipeline called a thrombin receptor antagonist, or TRA. In a news release announcing the deal, Merck also points to Schering-Plough’s global presence — 70% of its revenue comes from outside the U.S. — as well as it involvement in clinical areas, such as women’s health and respiratory treatments, that are also a focus for Merck.

The combined company, to be called Merck, will be run by current Merck CEO Dick Clark. Schering-Plough CEO Fred Hassan will “participate in the integration planning until the close,” the companies said.

Source: The Wall Street Journal

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Another big drug company is fighting with a generics maker over how soon a top-selling drug can go generic.

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Merck and Israeli generics maker Teva have a date set for Monday in federal court in Trenton, N.J., over the patent protecting the allergy and asthma drug Singulair. Teva is challenging the validity of Singulair’s patent, which expires in 2012, Dow Jones Newswires reports.

The stakes are high for Merck. The company’s top-selling drug, Singulair brought in $4.3 billion in sales in 2008, or 18% of total sales. But the drug’s sales slipped 3% in the fourth quarter, and sales of another major product, the blockbuster cervical-cancer vaccine Gardasil, have fallen too.

Some analysts told Dow Jones they think Merck has the stronger case. It’s also possible the companies could settle.

One thing is clear: Teva can be a tough competitor. The company surprised Wyeth with a launch of a generic version heartburn drug Protonix and briefly came to market with a generic version of AstraZeneca’s Pulmicort Respules asthma treatment.

Source: The Wall Street Journal

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In an updated safety review posted to the FDA website Tuesday, the agency said that it “has not yet reached a definitive conclusion regarding the clinical trial data on mood and behavioural adverse events associated with” Merck & Co.’s asthma drug Singulair (montelukast), as well as similar medications including AstraZeneca’s Accolate (zafirlukast) and Cornerstone Therapeutics’ Zyflo (zileuton). The agency anticipates that the ongoing assessments might take up to nine months to complete.

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The agency statement follows the announcement in March 2008 of a safety review investigating a possible link between Singulair and suicidal behaviour. The FDA indicated that Merck submitted data from 41 placebo-controlled clinical studies including 9929 patients who received Singulair and 7780 who took a placebo. Among the patients treated with the drug, one had suicidal thoughts and there were no completed suicides.

The FDA also noted that AstraZeneca submitted results from 45 placebo-controlled clinical trials conducted with 7540 patients treated with Accolate and 4659 who received a placebo, and no patients on the drug reported any suicidal behaviour. Regarding the data submitted by Cornerstone, the FDA said that the data did not show any suicidal behaviour in the Zyflo- treated patients. However, US regulators said that the clinical study data reviewed for suicide risk “were not designed specifically to examine” neuropsychiatric events, adding that “as a result, some events may not have been reported.”

In response to the review, Merck stated that the company “stands by the proven efficacy and safety of Singulair,” noting that “after a thorough review of the data from the controlled clinical trials of Singulair, and a careful assessment of post-marketing adverse events, Merck believes that the data support the continued use of Singulair in appropriate patients with asthma and allergic rhinitis.”

Source: FirstWord

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Merck & Co. CEO Richard Clark stated on Wednesday that the company is “aggressively looking” at all types of acquisitions for the coming year. “I think we’re in a very good position to make whatever investments are needed,” he said.

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The chief executive indicated that the company seeks “strategic opportunities,” reiterating Merck’s interest in acquiring a biotechnology firm to boost revenue and its pipeline, but specified that such a deal would have “to be financially smart.” He predicted that other drugmakers would also seek to complete merger deals and acquisitions, saying that “there is no doubt many companies are looking at that deal that will transform their company…I do think it can’t be business as usual and certainly the consolidations aren’t over.”

Deutsche Bank’s Barbara Ryan has speculated that the drugmaker might takeover Biogen Idec or Gilead Sciences. The drugmaker had approximately $6.8 billion in cash and short-term investments as of September 30, 2008, but if a deal does not transpire, Clark said he may raise the dividend or repurchase shares. Clark also mentioned that other priorities for Merck in 2009 include changing the company’s business model, which would include a plan to expand pilot projects in its US sales force.

Looking back on 2008, the chief executive described the year as “disappointing… and in many ways it was an unacceptable year.” Merck experienced several setbacks during the year, including the FDA’s not approvable letter for its experimental cholesterol drug MK-0524A. In addition, the company recorded declining sales of Singulair (montelukast), Gardasil, and Vytorin (ezetimibe and simvastatin), which it co-markets with Schering-Plough.

Source: FirstWord

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