Merck & Co Inc reported a better-than-expected quarterly profit, helped by higher gross margins, and the drugmaker also raised its revenue and profit forecasts for 2017. Net income attributable to Merck surged 38 percent to $1.55 billion, or 56 cents per share, in the first quarter. Excluding items, Merck earned 88 cents per share, beating analysts' average estimate by 5 cents, according to Thomson Reuters I/B/E/S.
Gross margins rose to 68 percent from 61.6 percent, primarily driven by a lower impact from acquisition- and divestiture-related expenses as well as restructuring costs, Merck said. Total revenue increased 1.3 percent to $9.43 billion in the quarter, beating analysts' average estimate of $9.25 billion. "The continued momentum of Keytruda in oncology, along with the strength of the vaccine and other franchises and animal health, helped to drive revenue growth," Chief Executive Kenneth Frazier said in a statement.
However the company's sales growth was curbed by a drop in its diabetes franchise, and the loss of patent exclusivity on its cholesterol drug Zetia, antibiotic Cubicin, Nasonex nasal spray in the United States as well as competition for Remicade, its big-selling arthritis drug, in Europe. Sales of cancer drug Keytruda, which works by taking the brakes off the immune system, rose 134 percent to $584 million, but missed Wall Street's consensus estimate of $589 million, according to Barclays. Merck on Tuesday raised its full-year 2017 adjusted profit forecast to $3.76 to $3.88 per share from the forecast of $3.72 to $3.87 it gave in February. It also hiked its revenue forecast to $39.1 billion-$40.3 billion from $38.6 billion-$40.1 billion.