Drug profits blow past Wall St estimates

By Bill Berkrot

NEW YORK (Reuters) - Merck & Co. (MRK.N), Schering-Plough Corp. (SGP.N) and Wyeth (WYE.N) all rode strong drug sales to quarterly profits that topped Wall Street expectations on Thursday, adding to the wave of good news for investors in major pharmaceutical companies.

All three also had promising announcements on drugs in development moving closer toward potential approvals.

The encouraging financial results followed earnings that topped analysts' expectations from Johnson & Johnson (JNJ.N), Abbott Laboratories Inc. (ABT.N) and Eli Lilly and Co. (LLY.N) earlier this week.

"We thought the companies would beat expectations, but I didn't think they would beat by this degree," Deutsche Bank analyst Barbara Ryan said.

"Results across the board have been strong due to a number of factors," she said, including "solid underlying demand in the marketplace, new product introductions for Merck and continued strong demand for cholesterol-lowering drugs for Merck and Schering-Plough" as well as cost cutting.

Schering-Plough shares jumped more than 8 percent to $30.97. Merck shares were up just 12 cents to $49.80, but they climbed 4 percent last Thursday, when the company raised its first-quarter earnings forecast, and they are up more than 50 percent over the last 12 months, leading an across-the-board rally in the sector.

Wyeth shares were off under 1 percent to $55.85 on concerns of potential delays on drugs in late-stage development, analysts said.

Schering-Plough reported a 55 percent rise in first-quarter earnings, blowing past analysts' expectations by 13 cents per share as net profit rose to $543 million.

Sharply higher sales of the two cholesterol fighters sold in partnership with Merck -- Vytorin and Zetia -- and a 34-percent jump in overseas sales of the arthritis medicine Remicade helped fuel the impressive results.

Booming sales of newer medicines offset declines in Merck's older products as the company posted net earnings of $1.7 billion, or 78 cents per share, or 84 cents excluding restructuring charges.

Before Merck signaled its expected earnings to the market last week, analysts had on average been looking for a profit of 64 cents per share, according to Reuters Estimates.

Merck sales rose 7 percent to $5.8 billion, spurred by surging revenue from the co-marketed cholesterol drugs, new vaccines and the recently-launched Januvia diabetes treatment.

Older medicines, such as the antidepressant Effexor and the childhood vaccine Prevnar sparked Wyeth's strong quarter in which it posted a better-than-expected 12 percent profit rise.

The company earned $1.25 billion, or 92 cents per share, and excluding one-time items topped Wall Street estimates by 7 cents per share.

Positive pipeline news also highlighted the quarterly reports, adding to hopes that the impressive stock rally in the pharmaceutical sector may well have legs.