Merck & Co. said Thursday it has revamped its research operations to make them more productive and has started a new four-pronged business strategy to increase revenue and profit.
The drugmaker also announced it will boost its quarterly dividend by 4 cents to 42 cents per share this quarter. That’s the first increase since 2004, just before Merck pulled painkiller Vioxx from the market because it increased heart attack and stroke risk. Merck’s shares rose sharply.
Merck’s pipeline of experimental drugs includes what could be several important new medicines for patients and shareholders, company executives told analysts during a daylong business briefing at Merck headquarters in Whitehouse Station. And Merck, the world’s No. 3 drugmaker by revenue, has eight new products for which it will seek U.S. approval in 2012 or 2013.
That’s just in the nick of time. Merck already has been hurt by competition from generic versions of blockbuster osteoporosis, blood pressure and cholesterol drugs, like its rivals. Next August, its current top seller, $5 billion-a-year allergy and asthma drug Singulair, gets hit by U.S. generic competition.
CEO Kenneth Frazier said the company hopes to keep 2012 revenue about the same as this year’s. In this year’s first nine months, it has increased sales by 5 percent, or nearly $2 billion, to about $35.8 billion.
Merck has gotten five new drugs approved this year, including breakthrough hepatitis C drug Victrelis and the first combination pill for people with both diabetes and high cholesterol, Juvisync. It also has applied to regulators for five more approvals. Those include a new contraceptive, a long-acting diabetes pill and a combination cholesterol drug.
Merck plans in 2012 and 2013 to seek U.S. approval for eight more medicines, including drugs for chronic insomnia, hardening of the arteries, osteoporosis and reversal of anesthesia, plus two allergy medicines and an improved version of its blockbuster cervical cancer vaccine Gardasil. Altogether, it has 19 medicines in late-stage testing.
Many of those came from Merck’s November 2009 acquisition of Schering-Plough Corp. Frazier said the integration has enabled the combined company to reduce costs by $2.8 billion.
He outlined the company’s new business strategy, which includes growing medicine sales in emerging and other key markets, expanding its consumer and animal health businesses, launching new drugs and boosting sales of existing ones, and managing spending tightly.
Merck also has trimmed the number of diseases for which it does research, developed computer models and other ways to decide much earlier whether to scrap or continue testing of experimental drugs, and made other changes to address one of the industry’s biggest challlenges — getting more bang for the billions companies pour into trying to create new drugs.
“The new research strategy and operating model that we’ve been implementing over the past few years is now in place,” research head Peter Kim told about 130 analysts. “These changes position us for long-term growth with a sustainable return on investment.”
He said Merck has two experimental drugs that could transform patient care. One, called anacetrapib, is in final-stage testing for hardening of the arteries. The other, known only as MK-8931, is in early testing for Alzheimer’s disease.
Merck also is developing more combination diabetes drugs, just five years after launching its first, Januvia, now the best-selling pill for Type 2 diabetes.
In midday trading, Merck shares rose $1.08, or 3.2 percent, to $34.88.