Restrained spending and higher sales of vaccines and prescription medicines for cancer and other diseases helped Merck & Co. post a 20 percent jump in third-quarter profit, easily beating Wall Street expectations.
Merck raised and narrowed its financial forecasts for 2016, and its shares rose in premarket trading.
The maker of Januvia diabetes pills on Tuesday reported net income of $2.18 billion, or 78 cents per share. That was up from $1.83 billion, or 64 cents per share, a year earlier.
The Kenilworth, New Jersey-based company said earnings, adjusted for one-time gains and costs, came to $1.07 per share. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of 98 cents per share.
The second-biggest U.S. drugmaker reported revenue of $10.54 billion in the period, up 5 percent from 2015's third quarter. That beat Street forecasts for $10.24 billion.
Sales of prescription drugs rose 6 percent to $9.44 billion, led by higher sales for injected cancer drug Keytruda, cholesterol pill Zetia, drugs used in hospitals and Gardasil and other vaccines.
Top seller Januvia and combination drug Jamumet, for Type 2 diabetes, saw sales dip 1 percent to a combined $1.56 billion in the quarter. Sales of cholesterol medicines Zetia and Vytorin, which lose patent protection at year's end, edged up 1 percent to $944 million.
Gardasil, a vaccine against cancer-causing human papilloma virus, saw sales jump 38 percent to $860 million, boosted by a U.S. price increase and purchases by government health programs. Children's vaccine Proquad also benefited from U.S. health program stockpiling, raising sales 28 percent to $496 million.
Keytruda, one of the hot new cancer drugs that works by boosting the immune system to fight tumors, posted sales of $364 million in the quarter, up 124 percent. Late Monday, the immuno-oncology drug won U.S. approval — two months ahead of schedule — for using Keytruda in bigger patient groups, including those newly diagnosed with lung cancer. Cancer drugs typically are approved initially for use after other drugs have failed patients, then gradually allowed to be used earlier in treatment.
Sanford Bernstein analyst Dr. Timothy Anderson wrote that the early approval "helps cement the product's lead versus competitors in the large lung cancer market," which should further raise its sales, along with investor sentiment. Anderson noted Merck is Sanford Bernstein's top pick among major drugmakers.
Sales of veterinary medicines rose 5 percent to $865 million, driven by the Bravecto line of flea and tick products, other pet medicines and poultry medicines.
Merck said it now expects full-year earnings in the range of $2.02 to $2.09, up from its July forecast of $1.98 to $2.08. The company anticipates revenue in the range of $39.7 billion to $40.2 billion, up from its prior forecast of $39.1 billion to $40.1 billion.
In premarket trading, Merck shares fell 75 cents, or 1.2 percent, to $60.
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