US drugs giant Merck said today that its quarterly net profit tumbled as it took a $552.6m blow from the withdrawal of blockbuster arthritis drug Vioxx.
A rash of lawsuits also now plagues the firm because of the global Vioxx withdrawal on September 30, prompted by a study showing it increased the risk for strokes and heart attacks. Merck said it was unsure if its insurance would provide enough money to cover potential lawsuit losses.
Sales fell 3.9% from a year earlier to $5.54 billion in the three months to September 30. Net profit slumped 28.7% to $1.33 billion. Earnings per share slid to 60 cents from 82.
In the last quarter of 2004, Merck said it expected earnings per share to slip to 48 to 53 cents, including the impact of about $700-750m in lost Vioxx sales.
'The voluntary withdrawal of Vioxx, with sales of $2.5 billion last year, represents a significant financial loss for us but clearly was the right course of action,' Merck chairman, president and chief executive Raymond Gilmartin said.
'Merck is redeploying research and development and marketing and sales personnel formerly dedicated to Vioxx to areas where additional growth opportunities exist, including other research programmes, support of in-line products and upcoming product launches,' he added.
Merck said it had insurance for up to $630m related to a mass of personal injury lawsuits filed over Vioxx, though some of the insurers disputed the coverage, along with insurance for shareholder lawsuits.
'The company is unable at this time to determine whether the company's insurance coverage with respect to the Vioxx personal injury lawsuits and the Vioxx shareholder lawsuits will be adequate to cover its defence costs and losses, if any,' the firm said.
As of October 15, Merck said the company had been named as a defendant in about 300 federal and state personal injury lawsuits including 900 plaintiff groups alleging personal injuries from its use. There were also several putative class actions.
In addition to the personal injury suits, a number of purported class action suits had been filed by shareholders and by former employees with company retirement plans, alleging Merck and some current or former officials had made false and misleading statements about Vioxx.
