Merck KGaA posts 1.1-percent drop in Q3 healthcare sales; lifts annual earnings guidance

Merck KGaA announced Tuesday that third-quarter sales in its healthcare division slipped 1.1 percent year-over-year to 1.7 billion euros ($1.8 billion), with growth more than offset by negative currency effects and the return of Kuvan rights to BioMarin Pharmaceutical. The company's overall revenue jumped 19.3 percent to 3.7 billion euros ($4 billion), boosted by last-year's acquisition of Sigma-Aldrich, while net income surged 25.5 percent to 457 million euros ($493 million).

"We had a good third quarter and are lifting our guidance for the full year," commented CEO Stefan Oschmann. Merck said it now expects annual earnings of between 4.45 billion euros ($4.8 billion) and 4.6 billion euros ($5 billion), up from an earlier estimate of 4.25 billion euros ($4.6 billion) to 4.4 billion euros ($4.8 billion). The company added that it continues to expect net sales of between 14.9 billion euros ($16 billion) and 15.1 billion euros ($16.3 billion) this year.

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According to Merck, the increase in annual earnings guidance is due primarily to its healthcare business, where funds set aside for halting studies of evofosfamide were reduced by around 40 million euros ($43 million). Last year, the company announced that it does not plan to seek approval of evofosfamide in advanced soft tissue sarcoma and advanced pancreatic adenocarcinoma after partner Threshold Pharmaceuticals reported Phase III study failures in the two indications.

In the third quarter, the drugmaker noted that sales of Rebif fell 6.7 percent to 436 million euros ($471 million), while revenue from Erbitux dropped 1.9 percent versus the prior-year period to 219 million euros ($236 million). Meanwhile, sales of Gonal-f grew 10.2 percent organically to 182 million euros ($196 million), which Merck explained was "primarily due to the favourable competitive situation in North America," where Ferring Pharmaceuticals' similar product Bravelle was recalled from the market last year.

Commenting on the results, DZ Bank analyst Peter Spengler said Merck "reported again a solid set of figures" above expectations.

Last month, Merck indicated that it expects to generate sales of around 2 billion euros ($2.1 billion) from new drugs in its pipeline by 2022. The company added that it is also targeting approval of one new medicine or new indication each year starting in 2017.

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