Merck & Co. raised its quarterly dividend by 11 percent and said it expects to file for approval of five new drugs within the next two years, including treatments to reverse anesthesia and raise good cholesterol.
Merck shares rose 3 percent to $34.80 in morning trading Thursday as the company outlined its prospects and plans at an investor meeting at its headquarters in Whitehouse Station, New Jersey.
Chief Executive Kenneth Frazier said the No. 2 U.S. drugmaker was "confident that we are taking the right steps to ensure that Merck is generating profitable sales growth to drive improved returns and even greater cash flow than we do today."
The company raised its quarterly dividend by 4 cents to 42 cents a share and said it expects sales next year to be at or near the 2011 level.
Merck, which has suffered a number of regulatory setbacks in recent years, said it expects to file for U.S. approval of five new drugs in 2012 and 2013, including bridion, its long-delayed treatment to reverse anesthesia, and Tredaptive, its drug to boost "good" HDL cholesterol.
The company also expects to file for approval of its experimental osteoporosis drug odanacatib; its insomnia drug suvorexant; and its V503 cervical cancer vaccine. And it expects to file for approval to sell three existing drugs for new indications.
Merck's drug pipeline expanded in late 2009, when it paid $41 billion to acquire rival Schering Plough Corp.
The most important experimental drug acquired from Schering Plough was vorapaxar, a blood thinner that works through a new mechanism of action. Hopes for the drug were dented in January when studies showed it was unsuitable for stroke patients. But investors are hoping it may prevent heart attacks among other high-risk populations.
Meanwhile, Merck is counting on newer drugs like Januvia, its treatment for diabetes, and Victrelis, its treatment for hepatitis C, to cushion the blow when its biggest product — the $5 billion-a-year asthma drug Singulair — faces competition in the coming year from U.S. generics.
Other promising drugs in Merck's pipeline include MK-3102 for type 2 diabetes and a vaccine against pneumococcal infections that could some day compete with Pfizer Inc's vaccine Prevnar.
Merck is also forging ahead with development of "biosimilars," generic forms of costly biotech medicines that could command high prices because generic biologics are almost as expensive to make as the branded original.
Merck has one of the industry's biggest research budgets — at $7.8 billion to $8 billion a year — even after paring back some in the third quarter.
Merck said in July it plans to cut 12,000 to 13,000 jobs by late 2015 to generate additional annual cost savings of up to $1.5 billion that can be invested in research and acquisitions. It cut a net 6,000 positions last year.
Wall Street expects Merck's earnings to grow only 2 percent in 2012, hurt by plunging sales of Singulair. Revenue is expected to grow 10 percent this year.
But analysts expect earnings growth to ramp up sharply in 2014 and beyond, making Merck one of the industry's top performers.
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