Merck & Co 3rd-qtr 2010 profit beats forecasts, but legal provisions decimate earnings

US drug giant Merck & Co (NYSE: MRK) reported financial results for the third quarter of 2010 showing that worldwide sales were $11.1 billion, a year-on-year leap of 84% due to the inclusion of Schering-Plough, which Merck acquired in a $49.6 billion deal last year, but slightly short of the average Wall Street forecast of $11.24 billion.

Net income for the third quarter was $342 million, down 90%. Earnings excluding a $950 million legal reserve for a previously disclosed criminal law suit relating to its once blockbuster COX-2 inhibitor arthritis/pain drug Vioxx (rofecoxib) - which was pulled off the market in 2004 due to serious side effects - and other one-time items, were $0.85 a share and were helped by cost-cutting and a lower tax rate, beating by $0.02 the average estimate of 15 analysts surveyed by Bloomberg. Third-quarter GAPP EPS was $0.11.

Merck, now the world’s second largest drugmaker by sales, raised the lower end of its 2010 earnings forecast to $3.31 to $3.39 a share, excluding one-time items, compared to its previous profit forecast of $3.29 to $3.39. Shares in the Whitehouse Station, New Jersey-based firm fell 1.7% to 36.31 on Friday, after the figures were released.