Merck Q1 profit up 7% despite sales decline

Major cost cuts enabled drugmaker Merck & Co. to offset continuing generic competition cutting sales of former blockbuster medicines. Merck's first-quarter profit rose 7% and trounced Wall Street expectations.

The maker of the Type 2 diabetes pill Januvia said Tuesday that net income was $1.71 billion, or 57 cents per share, up from $1.59 billion, or 52 cents per share, a year earlier.

Excluding one-time items, net income would have been $2.6 billion, or 88 cents per share. That was 9 cents better than analysts surveyed by FactSet expected. The one-time items, which totaled $896 million or 31 cents per share after taxes, were restructuring and acquisition-related costs.

Revenue totaled $10.26 billion. Analysts expected $10.44 billion.

Pharmaceutical sales dropped 5%, to $8.45 billion, as cheaper generic copycat pills hammered several off-patent drugs that once brought in billions of dollars a year. Those include asthma and allergy pill Singulair, allergy spray Nasonex and blood pressure drugs Cozaar and Hyzaar.

Merck's top seller, Type 2 diabetes pills Januvia and Janumet, brought in a combined $1.33 billion, up 3%. Sales jumped 10% to $604 million for immune disorder drug Remicade, and sales also climbed for HIV drug Isentress and several other products.

Consumer health sales dropped 4% to $454 million and sales of veterinary medicines declined 3% to $813 million.

Merck, based in Whitehouse Station, N.J., reaffirmed its 2014 forecast for profit of $2.15 to $2.47 per share.

"Investing in the best opportunities for growth while being disciplined in managing our cost enabled us to deliver bottom-line performance," CEO Kenneth Frazier said in a statement. "This is an exciting time as we prepare to commercialize the next wave of innovation coming out of Merck's research labs over the next few years."