Merck (MRK) Beats On Q3 Earnings & Sales, Updates Guidance

Merck & Co., Inc. (MRK - Free Report) reported third-quarter 2020 adjusted earnings of $1.74 per share, which comprehensively beat the Zacks Consensus Estimate of $1.44. Earnings rose 16% year over year (up 18% excluding the impact of currency) helped by higher revenues and lower operating expenses in the quarter.

Including acquisition and divestiture-related costs, restructuring costs and certain other items, earnings per share were $1.16, up 57% year over year.

Revenues increased 1% year over year (up 2% excluding currency impact) to $12.55 billion. Sales also beat the Zacks Consensus Estimate of $12.15 billion. The performance was driven by both Pharmaceutical and Animal health segment. However, sales of several of Merck’s medicines, especially Human Papillomavirus vaccine Gardasil 9, were hurt due to COVID-19 related mobility restrictions.  The company had estimated pharmaceutical revenues to suffer a negative impact of $475 million for the quarter due to the pandemic.

Quarter in Detail

The Pharmaceutical segment generated revenues of $11.32 billion, up 2% (up 2% excluding Fx impact) year over year driven by strong demands for cancer drugs and certain hospital acute care products. However, the negative impact of the COVID-19 pandemic on prescription trends of some drugs and generic competition for legacy drugs partially offset the growth.

Keytruda, the largest product in Merck’s portfolio, generated sales of $3.72 billion in the quarter, up 21% year over year. Keytruda sales have been gaining particularly from continued strong momentum in lung cancer indications and continued uptake in newer indications.

Alliance revenues from Lynparza and Lenvima also boosted oncology sales in the quarter, reflecting continued uptake in approved indications in the United States, Europe and China. Merck has a deal with Swiss pharma giant AstraZeneca (AZN - Free Report) to co-develop and commercialize PARP inhibitor, Lynparza and a similar one with Japan’s Eisai for tyrosine kinase inhibitor, Lenvima.

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