Merck and Co’s earnings for the third quarter dropped by 35% as it lost the exclusivity for Singulair the allergy and asthma drug that contributed to the pharmaceutical giant’s weaker sales.
Merck said expenses related to the restructuring of the research and development sector of the company also contributed to the performance by the company.
The company also narrowed its earnings estimate per share from 2013 from $3.45 to $3.55 to $3.48 to $3.52 and affirmed its outlook on revenue.
Recently Merck unveiled a plan for global reorganization to sharpen its research and development and commercial focus. The move includes lowering its employees by nearly 20%, which number over 81,000. The cuts will take place over the following 24 months.
Merck also announced it would be closing offices and discontinuing some drug development that was in the late stages, all part of the company’s effort to save close to $2.5 billion annually by 2015.
The changes made in R&D are being headed by the new chief of research at Merck, Roger Permutter, who previously was the biotechnology head at Amgen, Inc.
Costly flops in research, generic drugs competition, regulatory requirements as well as cost conscious insurance have prompted a number of drug makers to lower spending on research and reorganized company labs.
Merck’s profit for the quarter was $1.12 billion equal to 38 cents per share, which was down from the $1.73 billion or 56 cents per share for the same period a year ago.
Excluding acquisition and restructuring costs along with other items, earnings on an adjusted per share basis dropped to 92 cents from 95.
Revenue dropped 4% to end the quarter at $11.03 and fell 2% excluding fluctuations in currency.
Analyst that had been polled expected the earnings per share to be 88 cents on $11.12 billion in revenue.
Singulair sales plummeted 54% to $280 million after the allergy and asthma treatment lost its patent protection in the U.S. last year.