This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Merck & Co. Inc. (MRK) on February 03, 2009.
Management:
Chairman, President and CEO: Richard T. Clark
EVP and CFO: Peter N. Kellogg
EVP and President, Global Human Health: Kenneth C. Frazier
EVP and General Counsel: Bruce N. Kuhlik
IR: Eva Boratto
Key Investor Issues:
- Full year revenues eased 1% to $23.9 billion from 2007 levels.
- Full year 2009 non-GAAP EPS are forecast to be in the range of $3.15 to $3.30.bar restructuring charges.
Fourth Quarter Operational & Financial Highlights:
In 2008, the management completed the 2005 restructuring program.
- The company is on track to realize total cumulative savings of approximately $4.5 billion to $5 billion by 2010.
- The 2008 restructuring plan is well underway and the management expects the capital yield of cumulative pre-tax savings of $3.8 billion to $4.2 billion from 2008 to 2013.
- Merck had approximately 55,200 employees at the end of the year 2008, a 10% reduction compared with the 61,500 at the end of 2005.
During 2009, the company expects to file NDAs for three promising brand candidates in Phase 3.
- These products address patient needs in the treatment of migraine, acute heart failure and lipid management.
- The company’s pipeline includes nine Phase 3 programs continuing in 2009 and nine new Phase 3 programs anticipated to start this year.
The company’s revenue was down 3% in the fourth quarter of 2008 and 1% for the full year.
- Excluding the impact of the loss of marketing exclusivity for FOSAMAX in 2008, revenue increased 5% in the fourth quarter and the full year.
- The increase in revenue in Q4 excluding the impact of FOSAMAX was driven by strong growth for a number of recently launched products.
- These products include JANUVIA, JANUMET and ISENTRESS.
Outside the U.S, the reported revenue grew 5% with strong volume increases of 10%.
- The growth was helped by continued launches of new product and strong performance from many of the inline brand.
- The revenue growth internationally was offset by continued challenges to driving demand for SINGULAIR and GARDASIL in the U.S.
Brand Performance:
GARDASIL, the HPV vaccine:
- Sales in the fourth quarter were $286 million, a 16% decline when compared with the fourth quarter of last year.
- In the U.S., sales declined 19% and ex-U.S. sales declined 2%.
- Sales of GARDASIL in the SP-MSD European JV decreased by 26% versus fourth quarter 2007 to $171 million.
- This is due to a slowdown in demand in large early adopting markets like Germany.
- The management is implementing programs to make OB/GYNs aware of the actual vaccination rates in their practices.
- Approximately 6,500 OB/GYNs and primary care officers have enrolled in the dose replacement program launched in Q2 of 2008 to address reimbursement concerns.
- In January, the management received the second complete response letter from the FDA to its application for the use of GARDASIL in women aged 27 years to 45 years.
ZOSTAVAX:
- Total fourth quarter sales were $162 million.
- The company cleared the majority of backorders in December 2008.
- Demand for ZOSTAVAX continues to be strong.
- The management believes in its ability to clear all existing backorders in the first quarter of 2009.
SINGULAIR:
- Q4 sales were $1.1 billion, down 3% versus the prior year.
- Performance in the fourth quarter reflects the decline in the U.S. business of 11%.
- This was partially offset by strong 15% growth outside the U.S.
- SINGULAIR continues to do well in Japan helped by the successful launch of the allergic rhinitis indication and the introduction of the oral granular formulation for pre-school aged children.
- The company advised the FDA has now issued its follow-up to its early communication on SINGULAIR.
- The management is devoting significant resources to programs designed to improve performance and drive growth of SINGULAIR in the U.S.
