Merck Slips Amid Warning About Zocor

The company added that its performance was aided by a lower tax rate, a favorable foreign exchange rate and an investment portfolio that benefited from low interest rates.

Merck noted in its Monday announcement that its EPS calculations continue to include both its core pharmaceutical business and Medco Health Solutions, its pharmaceutical benefits management subsidiary. Earlier this year, Merck's board of directors approved a spinoff of Medco, and in late May, the company filed a registration statement with the Securities and Exchange Commission signaling that Merck would complete the spinoff through a pro rata distribution of Medco Health stock.

The company had predicted the spinoff would be realized in the third quarter of 2003, and Merck affirmed its timing and plans on Monday. Until the spinoff is completed, Merck will issue financial guidance that includes Medco.

The company raised full-year sales estimates on Cozaar and Hyzaar by $100 million to a range of $2.5 billion to $2.7 billion, and it raised estimates for Fosamax by $100 million to a range of $2.7 billion to $2.9 billion.

But it lowered guidance on Zocor by $200 million to a range of $5.4 billion to $5.7 billion. Zocor is the company's top-selling drug and competes with Pfizer's(PFE Quote) Lipitor.

And Merck cut its guidance for its Vioxx and Arcoxia drugs for arthritis and pain by $100 million to a range of $2.5 billion to $2.7 billion.

U.S. prescriptions of Vioxx dropped 7% in the second quarter vs. the same period last year. Merck blamed the decline in part on a U.S. price increase in June. The higher price "is expected to have an unfavorable impact" on wholesaler purchases for the rest of the year, the company warned.