Drug makers Merck & Co. and partner Schering-Plough Corp. both posted fourth-quarter results Tuesday that topped analysts' expectations, sending their shares up, but revenue from their crucial cholesterol franchise plunged.
Both companies beat profit expectations primarily because of aggressive cost-cutting, including eliminating thousands of jobs.
Merck's revenue fell 3%, to $6 billion, while Schering-Plough's revenue climbed 17% to $4.35 billion, largely from its acquisition of Organon Biosciences.
Merck shares gained $1.81, or 6.4%, to $30.24. Schering-Plough shares rose $1.44, or 8.2%, at $18.91.
Merck, based in Whitehouse Station, N.J., reported fourth-quarter profit of $1.64 billion, or 78 cents a share. A year ago, it lost $1.63 billion, or 75 cents. Excluding restructuring charges, Merck would have earned 87 cents a share. Analysts were expecting, on average, earnings of 74 cents a share and revenue of $5.98 billion.
Schering-Plough, based in Kenilworth, N.J., earned $480 million, or 27 cents a share, after losing $3.36 billion, or $2.08, a year earlier. Income excluding one-time items was 39 cents a share, topping the 30-cent average estimate of analysts.
Revenue from the two companies' partnership on the cholesterol drugs Vytorin and Zetia fell 26% to $1.1 billion.