Merck Vioxx News and Press Releases

Vioxx saps Merck profit, repatriation hurts rivals

J&J, Schering-Plough take big tax-related charges
BY ED SILVERMAN AND SUSAN TODD
Star-Ledger Staff

The side effects from Vioxx are proving to be lost sales for Merck and big reserves for lawsuits.

January 26, 2005 - The beleaguered drug maker yesterday reported fourth- quarter profit nose-dived 21 percent and more than $600 million was set aside to cover growing legal costs stemming from the Sept. 30 withdrawal of Vioxx. At the same time, two other pharmaceutical giants -- Johnson & Johnson and Schering-Plough -- posted mixed results that reflected charges for repatriating billions of dollars in overseas profits.

Although none of the companies generated stellar results, Wall Street reacted by boosting shares in all three drug makers. Merck outpaced its rivals, rising 3.6 percent. "No additional bad news -- at least for now -- is good news," Mehta Partners analyst Shaojing Tong said. Investors were also pleased Merck slightly raised its 2005 sales forecast for cholesterol fighter Zocor, he said.

For the quarter, earnings fell to $1.1 billion, or 50 cents per share, from $1.4 billion, or 62 cents per share, a year earlier. That was in line with what analysts were forecasting. A year ago, however, net income was $1.4 billion, or 62 cents. Revenue rose, but only 2 percent, to $5.75 billion. The anemic results were attributed to the loss of between $700 million and $750 million in Vioxx sales.

The painkiller was withdrawn after tests showed a link to heart attacks and strokes. Since then, Merck has battled accusations that it downplayed the safety risks and 575 lawsuits have been filed by patients who claim medical harm, along with several more by investors.

JOHNSON & JOHNSON

Johnson & Johnson touted its broad-based business, which ranges from soy-infused skin care lotions to prescription drugs, as the muscle behind its robust business.

The New Brunswick-based health-care giant's business was bolstered in the fourth quarter by some of its top-selling pharmaceuticals, including Topomax and Remicade, as well as increased sales of consumer products, such as its Clean and Clear skin care brand, which had especially strong sales in China and Korea.

But the company still has not overcome production troubles hampering its ability to supply Cypher, a drug-eluting coronary stent. And Procrit, once its top-selling medicine, continued to be hurt by competition and price erosion.

Net income fell 33 percent, largely because of a one-time $789 million charge related to taxes on funds to be repatriated under the American Jobs Creation Act. Earnings were $1.2 billion, or 41 cents per share, compared with $1.8 billion, or 62 cents per share a year earlier. The results beat the consensus forecast of analysts by 3 cents. Without the one-time charge, earnings rose 17.8 percent, to $2.0 billion, or 67 cents. Sales rose 13.3 percent, to $12.8 billion, compared with $11.3 billion for the previous fourth quarter.

SCHERING-PLOUGH

The Kenilworth drug maker's loss widened, largely because of the same tax provision that hit Johnson & Johnson. The company, which markets allergy medicine Claritin, lost $834 million, or 58 cents per share, compared with a loss of $181 million, or 12 cents, in the year-ago quarter.

Excluding $807 million in tax payments, the loss per share would have been 3 cents -- 2 cents worse than the consensus forecast of analysts surveyed by Thomson First Call. While the losses continued to mount, the firm's sales grew for the second quarter in a row. Revenues for the quarter rose 12 percent to $2.2 billion.

Fred Hassan, Schering-Plough's chairman and chief executive, said the company should return to profitability in 2005. But he said legal challenges and uncertainty in the pharmaceutical industry remain question marks.

The Associated Press and Reuters contributed to this report.

Judges to discuss Vioxx lawsuit in Ft. Myers

Danielle Pepe

LEE COUNTY - January 25, 2005 - The legal battle over the prescription drug Vioxx could play out in front of the nation from Southwest Florida. A panel of seven federal judges chose the federal courthouse in Fort Myers to hold their multi-district litigation proceedings. Victims of the drug say it's a step in the right direction for justice against a company that took too long to pull its product off the shelves.

Harry Rapuano was prescribed Vioxx because of a bad case of arthritis. After taking the drug for four months, he had a life threatening experience. "It was helping me with my arthritis, but I didn't know it was going to do anything to my heart," said Rapuano. Rapuano blames Vioxx for his heart attack. He isn't the only one. Thousands of people allege the drug caused either a heart attack or stroke and are going to court to get answers from the makers of Vioxx. The case against Vioxx is expected to move forward this week in Fort Myers at the federal courthouse where all parties will meet for the first time.

"The Vioxx panel of judges has selected Fort Myers, Florida as their location to determine where the multi-district litigation for Vioxx is going to occur," said attorney Michael Beckman. Beckman represents more than a thousand Vioxx customers who are suing the drug's maker. The seven federal judges have a lot of decisions to make on Thursday before the actual trial starts."They're going to make discussions on where it's going to be located, who the lead attorneys are going to be," said Beckman.

They will also decide if all cases will be grouped together in one trial -something Beckman says will keep the trial more focused. "This means a lot for us in order to help our clients - that we know where it's going that we can have a say in the process," said Beckman.

Rapuano says money is not the purpose of his lawsuit. Instead he wants whoever is to blame to be held accountable. "I just want to get better that's all I care about," said Rapuano. Thursday's proceedings are open to the public, but it is not a time for Vioxx users to testify.

In this case, the class action suit involves anyone who may have symptoms of heart problems they believe are associated with Vioxx. If you've had a heart problem, like a heart attack while on Vioxx, you may want to file an individual claim against Merck. Any law firm involved in the case, will be able to answer your questions, and let you know which type of suit you should file.

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