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WHITEHOUSE STATION, N.J. (TheStreet) -- As it grows closer to subsuming Schering-Plough (SGP) , Merck (MRK) - Get Merck & Co., Inc. Report reported a third-quarter profit that surpassed Wall Street targets by a goodly margin on the back of strong diabetes drug sales.

Merck also recently unloaded its veterinary drug business Merial to


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for $1.7 billion in after-tax profit. Including those proceeds, the company booked earnings in the just-ended period of $1.61 a share, or $3.4 billion.

Stripping out those gains, the company posted adjusted earnings per share of 90 cents, better than the 82 cents that analysts were, on average, expecting.

Merck's $6.05 billion in third quarter revenue, up 2% from a year ago, is about even with the Wall Street target of $6.01 billion.

The company said that foreign currency exchange rates trimmed its revenue by 3% during the most-recent quarter.

Looking ahead, Merck updated its financial guidance for 2009, saying it expects to post earnings (excluding items) of $3.20 to $3.30 a share. Analysts had pegged a target of $3.23 a share for the company's full-year earnings.

Schering-Plough also released results Thursday, reporting declines in both revenue and profit. The company blamed a higher tax rate and higher research spending as well as currency exchange rates.

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Another culprit: slumping sales of the cholesterol treatment it markets in partnership with Merck.

Schering-Plough, based in Kenilworth, N.J., said it earned $477 million, or 29 cents a share, on revenue of $4.5 billion.

Early in Thursday's regular session, Merck shares had fallen more than 2% to $32.

Merck's Januvia treatment for type-2 diabetes grew 30% to nearly $500 million during the quarter, pacing the growth rates among the company's major product lines (though its HIV inhibitor Isentress took in worldwide sales of $184 million, up 84% from a year ago). The biggest seller, the asthma pill Singulair, took in $1.1 billion in sales, up 5% from last year's third period.

The $41 billion merger between Merck and Schering-Plough is expected to close in the fourth quarter.

-- Reported by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.