Merck KGaA announced Tuesday that first-quarter sales in its healthcare segment dropped 5.5 percent year-over-year to 1.6 billion euros ($1.9 billion), with organic growth more than offset by negative exchange rate effects of 7.2 percent. "When we presented our financial results for 2017, we indicated that 2018 would be a transition year for Merck. The figures for the first quarter confirm this," remarked CEO Stefan Oschmann.
In the quarter, the company's overall sales declined 4.4 percent to 3.7 billion euros ($4.4 billion), in line with analyst estimates, while net income slipped 34.8 percent to 341 million euros ($407 million), missing forecasts of 596 million euros ($711 million). "The organic sales growth that we achieved in all regions was more than offset by negative exchange rate effects," Oschmann noted.
In the healthcare segment, Merck reported that sales of its new drugs Mavenclad and Bavencio reached 13 million euros ($16 million) and 12 million euros ($14 million), respectively. Mavenclad gained European approval last August for the treatment of adults with highly active relapsing multiple sclerosis, and has since been authorised in countries including Australia and Canada. Meanwhile, Bavencio, which is partnered with Pfizer, also gained its first clearance last year, receiving accelerated approval in the US for use in adults and children aged 12 and older with metastatic Merkel cell carcinoma, with the anti-PD-L1 therapy later being authorised by the FDA for patients with locally advanced or metastatic urothelial carcinoma.
However, Merck noted that other products were hit by currency headwinds in the three-month period, with revenue from Rebif reaching 348 million euros ($415 million), down from 415 million euros ($495 million) in the same quarter of 2017. Meanwhile, sales of Erbitux were 200 million euros ($238 million), lower than 218 million euros ($260 million) recorded in the prior-year period, with revenue from Gonal-f reaching 166 million euros ($198 million), versus 171 million euros ($204 million) in the first quarter of 2017.
For the full year, Merck said that it still expects organic sales growth of between 3 percent and 5 percent versus 2017, with revenue in the range of 15 billion euros ($17.9 billion) to 15.5 billion euros ($18.5 billion). The company indicated that the planned 4.3-billion euros ($5.1 billion) sale of its consumer health business to Procter & Gamble will reduce annual revenue by between 900 million euros ($1.1 billion) and 1 billion euros ($1.2 billion). Merck added that negative exchange rate effects will likely hit full-year earnings in the range of 5 percent to 7 percent, versus an earlier estimate of 4 percent to 6 percent.
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