Merck KGaA 4th-qtr profits triple, but miss expectations

German drug major Merck KGaA (MRK: DE) posted a massive improvement in fourth-quarter 2011 net profit, which almost tripled to 135.6 million euros ($179.1 million), compared with 46.5 million euros in the like 2010 period, when the company wrote down the value of Parkinson’s disease drug candidate safinamide, rights to which it returned to originator Newron Pharmaceuticals, by 134 million euros (The Pharma Letter October 24, 2011).

However, the results fell short of analysts' consensus expectations of around euro192 million euros, pulling Merck shares down 1.4% at euro79.58 in morning trading yesterday. Sales for the quarter rose 3.1% to 2.62 billion euros. Revenues from the Merck Serono drugs unit rose 3% to 1.54 billion euros, with growth was driven by Rebif (interferon beta-1a) which edged up 1% to 431 million euros, helped by price increases in the USA.

The company forecast that sales will rise “slightly” this year and next, while costs incurred for reorganization and cut jobs will hurt profit in 2012. The company recently announced an “efficiency program” (TPL February 26). “Merck displays a solid performance and shows confidence” with its forecast, Elmar Kraus, an analyst at DZ Bank, wrote in a note to clients quoted by Bloomberg. Analysts predict sales will rise 1.8% this year and 2.2% in 2013, based on estimates compiled by Bloomberg.