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Stock of the Day
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Merck (MRK)
Upcoming Acquisition between Merck and Schering-Plough Appears Healthy
Since the beginning of this year, there has been a lot of attention given to drugmaker Merck & Co., ever since the company announced in March that they would be merging with Schering-Plough Corporation (SGP: Charts, News, Offers). The deal has been carefully analyzed, going through all the regular regulatory channels. And as the end of the year approaches, and the final stages of the deal loom just around the corner, the big question is: Are these two companies in good health as they head towards the merger, or could there be larger issues plaguing this arrangement?
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| Daily Chart |
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| Stock Analysis |
Both companies reported earnings this morning, and as usual they have been looked at as an indicator of the companies' health and performance. Merck reported a slight 2% increase in revenue to $6.05 billion, but a whopping jump in net income from $1.09 billion to $3.4 billion. Taking a step back, however, most of the reason for the profit increase was due to the sale of its stake in the Merial animal health venture, which in itself caused a gain of $1.7 billion. Merck experienced mixed results for its various medications, such as an 84% increase in sales for its HIV drug Isentress, but a 22% drop in sales for its osteoporosis drug Fosamax, due to competition from generic competitors. Excluding certain items, earnings per share worked out to 90 cents, up from 80 cents the year before, and beating analysts' estimates of 82 cents.
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Schering-Plough reported a 1.7% decrease in revenue, and a 17% drop in profit from $576 million to $477 million. Prescription drug sales were flat, and consumer health products sales were up only 2%. The company's cholesterol drugs slipped, while a few others performed well including its rheumatoid arthritis treatment, Remicade. Both companies reported that their revenues were impacted by unfavorable currency exchange rates.
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This acquisition is going to move Merck from being the 8th largest pharmaceutical company to the 2nd largest, only behind Pfizer (PFE: Charts, News, Offers). Merck is doing everything possible to make sure this deal goes through, such as the sale of the Merial venture, which was necessary in order to get regulatory approval (Schering-Plough also has an animal-health division). Both companies are working on new or experimental products, and both are experiencing their share of successes and failures. Looking closely at the earnings reports and the achievements of their various products, everyone seems be optimistic that the two companies will be able to combine their strengths and weaknesses to form an even stronger company, sparking joy in its investors, and fear in its competitors.
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Other Info Related to Merck:
Merck in a post-blockbuster world - An interview with Merck CEO Richard Clark, about the future of his company and the health care industry.
Merck starts revealing payments to doctor-speakers - Earlier this week, Merck made headlines as it was the second company to disclosure information about its payments to doctors.
Routine Gardasil Vaccination for Boys: Not Recommended - Although the Gardasil vaccination was approved for males, the CDC refused to make it a required vaccine.
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More Stocks in the News:
For AT&T, It's the iPhone to the Rescue . . . Again - This author questions what AT&T (T: Charts, News, Offers) would do without its trusty iPhone.
Delta Posts $161 Million Loss as Recession Cuts Sales - If Delta (DAL: Charts, News, Offers), the world's largest airline, couldn't post a profit, is there any hope of a nearby recovery for the airline industry?
Starwood Hotels Q3: Mixed Results - Although Starwood Hotels (HOT: Charts, News, Offers) posted a profit, the recession remains a challenge for the hotel industry as well.
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Profile |
Click here to view a detailed profile of Merck.
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