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reported second-quarter earnings that were flat with year-ago results, matching Wall Street expectations.

The world's No. 3 drugmaker reaffirmed guidance for flat 2002 earnings, and said its core drug business should produce double-digit earnings growth in 2003.

Merck posted second-quarter earnings of $1.75 billion, or 77 cents per share, compared with earnings of $1.82 billion, or 78 cents per share in the year-ago period. Wall Street analysts were looking for earnings of 77 cents, according to Thomson Financial/First Call.

Total sales during the quarter grew 8% to $12.8 billion.

Vioxx, the company's flagship arthritis medicine, posted sales of $845 million, or a 16% increase over the comparable quarter last year. Vioxx sales have been stunted due to concerns that the drug slightly raises the risk of heart attacks in patients.

Overall, sales in Merck's core drug business dropped 3% in the second quarter, hurt by the loss of sales to generic competition for five drugs.

Earlier this month, poor market conditions and controversy over an accounting strategy forced the drugmaker to postpone the $980 million public offering of its

Medco Health Solutions

pharmacy benefit unit. Friday, Merck said it remained committed to completing the spinoff within the next 12 months.

Merck said it was comfortable with third-quarter earnings guidance in the range of 81 cents to 85 cents per share, and flat earnings for 2002. Analysts expect the drugmaker to earn 83 cents in the third quarter and $3.13 cents in 2002. Merck earned $3.14 cents in 2001.

Merck shares were up 2 cents to $42.02.