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UPDATE 2-Merck results beat forecasts; shares rise
* Q2 profit $1.05/share ex-items vs. $1.01 Wall St view
* Q2 sales $12.31 billion, vs. $12.15 billion forecast
* Sticks to profit view despite drag of stronger dollar
* Shares rise 1.9 percent
By Ransdell Pierson
July 27 (Reuters) - Merck & Co Inc reported higher-than-expected second-quarter earnings on Friday despite the negative impact of the stronger dollar, helped by cost-cutting and sales growth from its vaccines and treatments for diabetes and HIV.
The No. 2 U.S. drugmaker, whose shares rose nearly 2 percent in premarket trading, attributed the profit beat largely to a $260 million decline in marketing and administrative expenses in the quarter, along with strong sales of key products.
The company is girding for the U.S. patent expiration next month on its biggest product, $5 billion-a-year asthma drug Singulair, which will open the floodgates to cheaper generics. Analysts expect the pill to swiftly lose as much as two-thirds of its sales and hurt Merck's results for the rest of the year and well into 2013.
Merck is counting on its respected pipeline of experimental drugs to come through and help offset the vanishing Singulair sales. Over the next 18 months, it aims to seek six drug approvals, including marketing applications for new types of therapies for insomnia and osteoporosis.
ISI Group analyst Mark Schoenebaum said quarterly results were "very good," driven by surprisingly strong sales.
"But this really isn't an earnings story, (but) more of an emerging pipeline story against the backdrop of low investor expectations," he wrote in a research note.
Merck said it had earned $1.79 billion, or 58 cents per share, in the second quarter, compared with $2.02 billion, or 65 cents per share, a year earlier.
Excluding special items, the company earned $1.05 per share. Analysts on average expected $1.01.
Sales rose 1 percent to $12.31 billion, topping estimates of $12.15 billion. They would have risen 5 percent if not for the stronger dollar, which lowers the value of sales in overseas markets.
Despite the negative impact of foreign exchange, Merck affirmed its full-year earnings forecast of $3.75 to $3.85 per share, excluding special items. That compares with last year's profit of $3.77.
Singulair sales rose 6 percent in the second quarter to $1.43 billion. Sales of diabetes drug Januvia, Merck's fastest-growing product in the past few years, soared 36 percent to $1.06 billion, while a related treatment called Janumet rose 28 percent to $411 million.
Sales of HIV treatment Isentress rose 18 percent to $398 million. But sales of blood pressure treatment Cozaar, which recently lost patent protection, tumbled 17 percent to $337 million.
Merck shares rose 1.9 percent to $44.16 in premarket trading.
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