Merck, the giant pharmaceutical maker missed its earnings target during the first three months of 2013. At first glance, earnings jumped 85 cents a share, which exceeded estimates from Wall Street analysts by over 6 cents a share. However, that was due to a one-time tax benefit.
Sales were a big disappointment as they came in 4% below estimates at $10.7 billion, which was over $500 million below expectations. Merck tried to lessen the blow from the earnings report by announcing a buyback on shares worth $15 billion in an attempt to hold the earnings per share up along with the stock price.
One Wall Street analyst said all the buyback amounted to was throwing a second bone to shareholders by management. The first was replacing the long time research head of the company Peter Kim with Peter Perlmutter the former Amgen head of R&D.
The disappointment in the quarter was due to poor sales from their drug Januvia, its best selling diabetes medication as well as Janumet, a pill that combines a generic medication with Januvia. Analysts expected it to be the world’s best selling drug one day. Januvia however, was a disappointment with sales that were 19% lower than analyst’s projections with Janumet 11% lower than was forecasted.
Not helping the drug maker was that currently Januvia along with other drugs are being reviewed currently by the U.S. Food and Drug Administration to determine if the risk of developing the painful and serious conditions pancreatitis is elevated through using the medication.
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