Following a tumultuous first quarter for Merck & Co., in which its Vytorin / Zetia franchise took a hit following the release of lackluster outcomes data, management said it anticipates lower sales of the brands to continue in the U.S. for the remainder of the year.

"Most [physicians] we expect will continue to prescribe Zetia and Vytorin, but may increasingly reserve these medicines for their higher-risk patients or for patients who cannot tolerate higher doses of statins at least in the short term," Global Human Health President Kenneth Frazier said during Merck's April 21 first-quarter conference call.

Despite negative publicity surrounding the cholesterol-lowering brands throughout the first quarter - at the start of the year when top-line data from ENHANCE was released and again in March during the American College of Cardiology meeting - sales of Zetia (ezetimibe) and Vytorin (ezetimibe/simvastatin) increased during the first quarter, driven by growth in international markets.

Combined worldwide sales of the two brands as reported by the Merck/Schering-Plough joint venture were $1.2 billion in the quarter, an increase of 6 percent over the year-ago period. Sales of Zetia were $582 million, up 7 percent, and sales of Vytorin were $651 million, up 4 percent.

In the U.S., however, sales of Zetia fell 3 percent to $395 million in the first quarter, and sales of Vytorin fell 7 percent to $456 million.

Merck, which records results from its interest in the Merck/Schering-Plough joint venture as equity income from affiliates, reported $393 million in the quarter compared with $347 million a year ago.

As a result of slowing sales of Zetia and Vytorin, Merck decreased the equity income it anticipates recording from affiliates for the year by $700 million, the company said. The firm now expects equity income from affiliates to be approximately $2.3 billion to $2.6 million for the year.

"We anticipate the continued confusion in the market will cause sales of Zetia and Vytorin to be significantly lower than expected for the entire year. As a result, we are lowering our full-year guidance for equity income by $700 million," CEO Richard Clark said.

While the company prepares for lower sales of the two cholesterol brands, it increased guidance for several other products, forecasting $200 million more each in sales of Singulair , Cozaar / Hyzaar and Gardasil . Merck also raised guidance for Fosamax by $400 million, driven by strong sales of Fosamax Plus D despite the launch of generic versions of alendronate in February.

Merck reaffirmed that non-GAAP earnings per share will be in the range of $3.28 to $3.38, adjusting for certain items, and GAAP EPS will be $3.84 to $4.00.

In the first quarter, sales increased only 1 percent to $5.82 billion, with the sluggish growth attributed to lower sales of Fosamax, Zetia and Vytorin.

Sales of Fosamax fell 37 percent to $470 million in the first quarter. Growth drivers included the blood pressure franchise Cozaar/Hyzaar (up 6 percent to $847 million), allergy medication Singulair (up 10 percent to $1.1 billion) and HPV vaccine Gardasil (up 7 percent to $390 million). Sales of the HIV drug Isentress , approved in October, were $47 million. The diabetes drugs Januvia and Janumet generated $272 million and $58 million, respectively, in the first quarter.

Net income rose to $3.3 billion compared to $1.7 billion in the first quarter of 2007. The surge included a $1.4 billion after-tax payment from a partnership with AstraZeneca.

Merck and Schering-Plough's handling of the ENHANCE data is costing the companies more than just lost revenues. The firms are being investigated by the House Committee on Energy and Commerce and the New York and Connecticut Attorney General's Offices. More recently, on April 4, the firms received a subpoena from the New Jersey Attorney General's Office seeking documents related to ENHANCE and the marketing of Vytorin.

In addition, since mid-January, Merck said it has become aware of 115 civil class-action lawsuits associated with the sales and promotion of Vytorin and Zetia. A putative class-action lawsuit also has been filed by a Merck shareholder alleging the company violated federal securities laws.

In the wake of the release of the ENHANCE data, which unexpectedly showed that Vytorin did not halt progression of atherosclerosis in patients with familial hypercholesterolemia, many in the medical community have been pushing a return to treatment with lower-costing statins (¹ Also see "ACC Meeting ENHANCE Panel Calls For Return To Statins" - Pink Sheet, 30 March, 2008.).

-Jessica Merrill (j.merrill@elsevier.com)

Merck Revises Guidance To Include $700 Million Less In Vytorin/Zetia Sales

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