Oops, Vioxx did it again.
flagship arthritis drug are falling behind expectations for the second consecutive quarter, but this time, the drug giant says the shortfall is bad enough to lower second-quarter and full-year earnings.
Friday, Merck said it expects second-quarter earnings of 77 cents to 79 cents per share, compared to consensus analyst expectations of 81 cents, as polled by
Thompson Financial/First Call
Merck's 2001 earnings will be $3.12 per share to $3.18 per share, lower than the previous company estimate of $3.15 to $3.25, and consensus estimate of $3.20 per share.
Shares of Merck fell $6.36, or 8.5%, to $68.11 in Friday trading.
A slowdown in Vioxx sales first came to light in April when Merck reported disappointing first-quarter sales of $485 million, significantly lower than Wall Street expectations. At the time, the company said Vioxx sales fell short mainly because wholesalers stocked an additional $150 million of the drug in the fourth quarter of last year.
On Friday, Merck reiterated previous 2001 sales forecasts for Vioxx of $3 billion to $3.5 billion. But the company conceded that Vioxx sales "are not currently expected to reach the top of its range because of slower than expected penetration of the coxib class into the analgesics and arthritis market." Coxib refers to Cox-2 inhibitors -- the family of arthritis drugs that includes
Celebrex as well as Vioxx.
Merck also blamed the adverse impact of foreign exchange on its overall business for its 2001 earnings warning.
Five key drugs largely drive Merck's growth. While Vioxx is falling short, the drug giant said sales of the other drugs are on track. On Friday, Merck projected 2001 sales of Zocor, a cholesterol figher, to be between $3 billion and $3.5 billion; Fosamax for osteoporosis to be $1.5 billion to $1.7 billion; anti-hypertensives Cozaar and Hyzaar in the range of $1.8 billion and $2 billion; and asthma controller Singulair to be between $1 billion and $1.2 billion.
The company has several other drugs, including Vasotec, Pepcid and Mevacor, whose sales are being hurt by patent expirations.
Merck estimated that gross margins would be about 39% in 2001, about 1% lower than its previous estimate.