TRENTON, N.J. (AP) — Merck & Co. will emphasize its progress in developing a new crop of prescription drugs to offset revenue losses from generic competition to older ones, particularly Singulair, when it reports second-quarter results before the stock market opens Tuesday.
WHAT TO WATCH FOR: CEO Kenneth Frazier will likely note that Merck, the world's third-biggest drugmaker by revenue, now has a half-dozen experimental drugs under review for potential approval by regulators, mostly in the U.S.
He'll note Merck got U.S. approval in May for its new cholesterol drug Liptruzet, which combines the company's drug Zetia with a generic version of the mega-blockbuster drug Lipitor. Analysts will be watching how initial sales are going. And he'll discuss how well sales are growing in India and other key emerging markets now spending more on health care, including China, where Merck recently opened its fourth factory.
In addition, the maker of Gardasil, a vaccine against sexually transmitted cancers, and blockbuster Type 2 diabetes pills Januvia and Janumet plans to apply by year's end for approval of two more drugs. And it has some additional ones in mid- or late-stage patient testing.
Meanwhile, on Friday medical advisers to the European Union said their investigation found no evidence that Januvia and many other popular diabetes pills raised risk of pancreatic cancer, as some research suggested earlier this year. Those fears may have cut into sales of Januvia, now Merck's top seller, in the latest quarter.
Still, Merck is likely to report a fourth straight quarter with lower revenue, thanks to the U.S. patent expiration last August for Singulair. The asthma and allergy pill had been the world's 11th-best-selling drug. It brought Merck $5.5 billion in 2011 — more than 11 percent of its overall revenue.
Prescriptions for Singulair filled in the U.S. dropped by 90 percent in the first month after much-cheaper copycat versions hit drugstores, and it now has generic competition in most major markets.
The company, based in Whitehouse Station, N.J., is awaiting regulatory approval for several new drugs and a new pill version of its liquid antifungal drug Noxafil. The others include ovarian cancer drug vintafolide, an anticlotting drug for preventing heart attacks and strokes called vorapaxar and two immunotherapy drugs — dissolving tablets taken for a year or so to gradually reduce allergic reactions — for ragweed and grass allergies.
Another drug, sugammadex for reversing effects of anesthesia after surgery, has run into trouble again. Last week, the Food and Drug Administration canceled a meeting of experts who were to review it, saying it needs more time to resolve questions about one of the sites used for patient testing. The drug was rejected by the FDA in 2008 due to allergic reactions and bleeding among some patients.
Separately, the FDA gave breakthrough therapy status in April to Merck's lambrolizumab, a potential treatment for advanced melanoma designed to use the immune system to fight cancer. The FDA's designation should speed up final testing and the review. Merck also is testing it for use against other types of cancer.
Meanwhile, Merck still plans to apply by the end of 2013 for approval of fertility drug Elonva and an updated version of Gardasil that protects against more strains of human papilloma virus, which causes cervical, anal and other cancers.
But earlier this year, Merck pushed back its timetable for seeking approval of a next-generation osteoporosis drug, odanacatib, until next year. On July 1, the FDA said it won't approve high doses of its experimental insomnia pill suvorexant due to concerns about patient safety and will require some new studies before it will approve lower doses.
Merck is continuing tests of its experimental drug to fight Alzheimer's disease after one recent study showed positive effects, and, along with partners, it's testing new drugs for Type 2 diabetes and a combination treatment for hepatitis C.
On the downside, it recently canceled testing of a potential Parkinson's disease drug called preladenant because it wasn't working.
WHY IT MATTERS: Besides Singulair, Merck got generic competition last year for migraine treatment Maxalt. So like several of its big rivals, it needs to make up for billions in lost annual sales.
To do so, it needs to get nearly all of its experimental drugs approved and to keep increasing sales for its current top sellers, some of which face increasing competition from other brand-name medicines.
Meanwhile, government health programs in many countries, particularly in Europe, keep reducing the price they will pay for drugs, and even China is starting to do so. That's hurting the whole industry.
WHAT'S EXPECTED: Analysts surveyed by FactSet, on average, expect earnings per share of 82 cents and sales of $11.24 billion.
LAST YEAR'S QUARTER: Merck reported net income of $1.79 billion, or 58 cents per share — $1.05 excluding one-time items. Revenue was $12.31 billion.
Follow Linda A. Johnson at http://twitter.com/LindaJ_onPharma.