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Drugmaker Merck & Co. on Wednesday reported lower first-quarter results and cut its 2013 profit forecast by 15 cents a share.
Merck tried to reassure investors by announcing a huge share buyback, up to $15 billion worth of its stock, but its share price dropped nearly 3 percent in premarket trading after its revenue missed expectations.
Competition from generic versions of its drugs and unfavorable exchange rates - problems hurting most drugmakers these days - hurt Merck.
Merck, based in Whitehouse Station, N.J., said the stronger dollar cut revenue by 2 percent, but the big hit was copycat version of its top seller, asthma and allergy drug Singulair. It got U.S. generic competition last August, and as a result Singulair sales plunged 75 percent in the quarter, to $337 million from $1.34 billion.
The world's third-largest drugmaker by revenue said its first-quarter profit fell 8.3 percent as total revenue tumbled by 9 percent.
Merck, which sells the popular Type 2 diabetes pill Januvia, said net income was $1.59 billion, or 52 cents per share, down from $1.74 billion, or 56 cents per share, a year earlier.
Excluding $992 million in one-time items, mostly acquisition and restructuring charges, income was down 15 percent to $3.59 billion, or 85 cents per share. That was still a nickel better than analysts expected.
Revenue totaled $10.67 billion, down from $11.73 billion. Analysts polled by FactSet, on average, expected revenue of $11.11 billion.
Merck announced it will buy back up to $15 billion in shares, half of it this year and the rest over time. That's in addition to the $772 million worth of shares it bought back from January through April under a prior buyback. That program still has another $1.1 billion in purchases authorized, meaning Merck could repurchase a total of $16.1 billion in shares.
"This share repurchase program, combined with our strong dividend, reinforces our continued commitment to delivering increased value to shareholders," CEO Kenneth Frazier said in a statement.