Merck & Co. reports a 10% higher profit in Q1 on solid demand for its cancer drug

Merck & Co. (NYSE: MRK) posted stronger than expected profit in the first quarter on Tuesday. The company attributed the success to solid demand for its world-renowned cancer drug, Keytruda. Owing to the Coronavirus uncertainty, however, Merck said that its sales are likely to remain under pressure in the upcoming quarters.

Merck said that drugs that its physician-administered drugs including Keytruda contribute around 66% to its total revenue. As Coronavirus restricts people to their homes, the pharmaceutical company added, it is taking a significant hit to its sales. According to Merck:

“The company anticipates reduced demand for its physician-administered products while pandemic-related access measures remain in place.”

Merck suspends its share buyback programme

The company also suspended its share buyback programme on Tuesday to shore up its finances.

At £2.63 billion, Keytruda reported a 45% increase in its sales in Q1. The company revealed its net income at £2.58 billion in the recent quarter that came in stronger than £2.34 billion that it posted in the same quarter last year.

Excluding items, Merck made £1.20 of earnings per share in the first quarter. According to Refinitiv, analysts had anticipated the company to earn a lower £1.07 per share in the recent quarter.

Merck’s announcement on Tuesday also highlighted that it now expects to make £4.14 to £4.30 of adjusted profit per share in 2020. Originally, the company had estimated full-year adjusted profit of £4.50 to £4.63 per share.

Merck collaborates with Institute for Systems Biology

Earlier this week on Monday, Merck also announced its collaboration with a Seattle-based research organization, Institute for Systems Biology (IBS). The collaboration aims at identifying molecular mechanisms of COVID-19 that can later help in developing an effective vaccine against the novel flu-like virus. The research, the pharmaceutical company added, is financially supported by BARDA (Biomedical Advanced Research and Development Authority).

COVID-19 has so far infected more than 1 million people in the U.S and has caused over 56,800 deaths.

At £67 per share, Merck is currently a little under 10% down year to date in the stock market. The stock dropped to as low as £53 per share in March. Its performance in 2019 was reported fairly upbeat with an annual gain of roughly 20%.

At the time of writing, Merck’s has a market cap of £170 billion and a price to earnings ratio of 21.75.