UPDATE 1-Merck profit falls, hurt by charges, generic Zocor

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NEW YORK, Jan 30 (Reuters) - Merck & Co. (MRK.N: Quote, Profile, Research, Stock Buzz) said on Tuesday fourth-quarter earnings fell sharply due to special charges and generic competition for its Zocor cholesterol drug, but company sales handily beat Wall Street forecasts.

The company said it earned $474 million, or 22 cents per share, compared with $1.12 billion, or 51 cents per share, in the year-earlier period.

Excluding special items, the drug maker earned 50 cents per share. Analysts, on average, expected 51 cents per share, according to Reuters Estimates.

The special charges including $466 million related to Merck's purchase in late December of Sirna Therapeutics, a biotechnology company that makes drugs using the promising new technology of RNA interference.

Merck also took a $75 million charge to set aside additional funds for legal costs of fighting tens of thousands of lawsuits that allege harm from the company's recalled Vioxx arthritis drug.

The company reaffirmed it expects earnings this year of $2.51 to $2.59 per share, excluding restructuring charges, little changed from its profit of $2.52 per share last year.

Merck said it remains on track to deliver double-digit compound annual earnings growth by 2010, excluding one-time items and restructuring charges.

Quarterly results were dragged down by Zocor, until recently Merck's biggest product, whose sales plunged 65 percent to $379 million due to U.S. generic competition that began last summer.

Despite Zocor's free fall, Merck said company revenues rose 5 percent to $6.04 billion, due to strong sales growth of many of its other medicines and vaccines. The Reuters Estimates forecast was $5.36 billion.

Sales of asthma drug Singulair jumped 17 percent to $960 million, while combined revenue from hypertension drugs Cozaar and Hyzaar rose 11 percent to $865 million.

Vaccine sales doubled to $683 million, fueled by demand for three recently launched vaccines -- including the first vaccine against strains of the virus that causes cervical cancer and the first shingles vaccine.

Combined sales of Merck's newer cholesterol fighters, Vytorin and Zetia, soared 46 percent to $1.1 billion in the quarter. Merck splits profits from the medicines with Schering-Plough Corp. (SGP.N: Quote, Profile, Research, Stock Buzz).

((Reporting by Ransdell Pierson, editing by Brian Moss; Reuters Messaging: ransdell.pierson.reuters.com@reuters.net; ransdell.pierson@reuters.com; +1 646-223-6034)) Keywords: MERCK RESULTS/

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