Merck profit hurt by withdrawal of Vioxx

NEW YORK - Merck and Co. Inc. on Tuesday said fourth-quarter earnings fell 21 per cent, hurt by the withdrawal last September of its blockbuster arthritis drug Vioxx and related charges.

Earnings fell to US$1.1 billion ($1.56 billion), or 50 cents per share, from US$1.4 billion, or 62 cents per share, a year earlier.

Merck said the withdrawal of Vioxx meant the loss of US$700 million to US$750 million in sales in the quarter. The drug was pulled off the market after it doubled the incidence of heart attack and stroke in a large cancer-prevention trial.

The safety of the medicine was first questioned only months after its 1999 launch, when it quadrupled the incidence of heart attacks, compared with an older painkiller, in a trial involving arthritis patients.

Whitehouse Station, New Jersey-based Merck said it set aside US$604 million in the fourth quarter to pay future legal expenses for Vioxx litigation. It said it had not yet taken any charges for future payouts to former Vioxx users expected to sue the company alleging they were harmed by the pill.

Some industry analysts expect Merck's Vioxx payouts to approach US$20 billion, just as rival drugmaker Wyeth has had to pay users of its recalled "fen-phen" diet medicines.

Merck said it aims to restore earnings growth by cutting costs and launching new products. But Wall Street considers few of the company's experimental products in late-stage testing likely to become big sellers.

Merck's global sales rose only slightly in the fourth quarter, to US$5.7 billion from US$5.6 billion a year earlier.

Merck stood by its 2005 forecast for earnings of US$2.42 to US$2.52 per share, reflecting as much as a 7 per cent decline from 2004. It also stood by its first-quarter profit forecast of 54 cents to 58 cents per share.

- REUTERS