By Manas Mishra
(Reuters) – Merck & Co Inc said on Tuesday it expects the coronavirus pandemic to reduce 2020 sales by more than $2 billion, and the U.S. drugmaker lowered its profit forecast as a big drop in doctors’ office visits during the outbreak will take a hefty toll, sending its shares down more than 3%.
Many of Merck’s top-selling products, including blockbuster cancer drug Keytruda, are administered by physicians.
Rival drugmakers Pfizer Inc on Tuesday stuck to its forecasts, and Eli Lilly and Co raised the top end of its 2020 profit outlook last week.
But Merck is particularly vulnerable to stay-at-home efforts to curb the spread of the coronavirus and people avoiding doctors and hospitals over fear of becoming infected.
“Two-thirds of our products are physician administered, and that is probably somewhat unique and is causing the impact,” Chief Financial Officer Robert Davis said on a conference call.
Davis said he expected most of the hit to Merck’s business in the second quarter, with a potential for recovery by the end of the year as restrictions imposed due to the pandemic abate.
The company, which also suspended its share buyback program, now expects full-year adjusted profit of $5.17 to $5.37 per share, down from its prior view of $5.62 to $5.77.
Johnson & Johnson, whose large medical device business will be hurt by delayed elective surgeries during the pandemic, also lowered its 2020 profit forecast this month.
“Strong underlying demand for Merck’s products will lead to a sales rebound in 2021 as the pandemic eventually ebbs,” said Michael Levesque, senior vice president of Moody’s.
Merck beat analysts’ first-quarter profit and sales estimates on increased demand for Keytruda, largely before the coronavirus epidemic put most of the country under stay-at-home orders.
Keytruda sales jumped 45% to $3.28 billion. Total sales grew 11.5% to $12.06 billion, beating estimates of $11.46 billion, according to IBES data from Refinitiv.
Merck said it saw a slight benefit as customers stocked up on some of its products, including animal health drugs and its Gardasil vaccine to prevent cancers associated with the human papillomavirus.
Merck said it was working on a coronavirus vaccine, and was in discussions with multiple groups regarding three separate potential viral vaccine platforms. It said it would announce the details of those collaborations once they are finalized.
Excluding items, Merck earned $1.50 per share, beating analysts’ average estimate by 16 cents.
Merck shares were down 3.4% at $81.12.
(Reporting by Manas Mishra in Bengaluru and Michael Erman in Maplewood, N.J.; Editing by Anil D’Silva and Bill Berkrot)