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Merck Matches Estimates, but Sees Slowing Drug Sales

The drugmaker's fourth-quarter pharmaceutical revenues grew just 5%.

Merck

(MRK) - Get Report

said Tuesday that fourth-quarter earnings per share grew 8% as slowing drug sales put a dent in the drugmaker's top-line growth.

The No. 3 drugmaker reported fourth-quarter net income of $1.86 billion, or 81 cents per share, compared with $1.76 billion, or 75 cents per share, in the year-ago quarter. Earnings matched reduced Wall Street expectations.

Fourth-quarter revenue totaled $12.6 billion, a 10% increase over the fourth quarter last year. By comparison, Merck's total revenue in the first nine months of 2001 grew 22% from the comparable period in 2000.

The culprit: Lackluster drug sales. Merck's fourth-quarter pharmaceutical revenues grew just 5%, minus the negative effects of currency exchange.

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None of the glum news from Merck comes as any surprise. In December, the drugmaker warned that 2002 would be a "transition year" with earnings flat compared with 2001 because of patent expirations on key drugs. And the company already lowered those 2001 earnings estimates in June, when it said slowing sales of the Vioxx arthritis drug were putting a bite in the bottom line.

Merck closed the books on 2001 with net income of $7.28 billion, or $3.14 per share. Tuesday, the drugmaker reiterated that 2002 earnings would be flat with 2001 results.

Analysts are expecting 2002 earnings of $3.14 per share, according to consensus estimates compiled by Thomson Financial/First Call.

Digging deeper into the fourth-quarter numbers, sales of Zocor, the company's cholesterol fighter and top-selling drug, totaled $2.1 billion, ahead of most analysts' estimates. Total Zocor sales for 2001 reached $6.7 billion, up 26% from 2000.

Vioxx sales totaled $550 million in the fourth quarter, well below many Wall Street estimates and down from $795 million in the third quarter. The arthritis drug posted 2001 sales of $2.6 billion, an 18% increase over 2000 sales.

Sales of Cozaar and Hyzaar, Merck's blood pressure drugs, reached $470 million in the fourth quarter and $1.9 billion in 2001, an 11% increase over 2000 sales.

Shares of Merck closed Friday at $58.