Merck’s Sales Tumble and Pfizer’s Zoetis Goes Public: Healthcare Recap

Shares of Vivus, Zoetis, and Merck were all on the move Friday.

Vivus (NASDAQ:VVUS): Closing Price $12.43

Shares of Vivus received a boost on Friday after a report published in The American Journal of Cardiology showed that the pharmaceutical company’s weight-loss treatment Qsymia significantly improved cholesterol levels, triglycerides, and blood pressure in obese and overweight patients.

The company’s stock price has dropped steeply since the drug was released at the end of September, as its sales have been underwhelming. Wall Street expected Vivus’s newly launched weight-loss treatment Qsymia to be a success; the drug was the second obesity medicine to receive regulatory approval by the Food and Drug Administration and the first to reach the market in more than ten years. But as many insurers have failed to cover the drug, its prohibitive cost has kept sales low. As a result, analyst downgrades have rained down on the company recently, and large shareholders have even called for its sale.

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But with far greater medical applications now proven, investors have been given a small degree of assurance that Qsymia sales will improve, and more insurers will cover the treatment. Shares rose 6.8 percent in premarket trading, and at the close, the stock was up close to 3 percent.

Zoetis (NYSE:ZTS): Closing Price $31.01

Pfizer’s (NYSE:PFE) former animal nutrition unit is now a public company. The new company opened at $31.50 per share, rising 21 percent from its $26 initial pricing Thursday night. Shares of Zoetis were in such high demand that its stock was priced higher than the expected range of $22 to $25 per share. Pfizer’s spinoff raised $2.2 billion, making it the largest initial public offering from a United States-based company since Facebook (NASDAQ:FB), which generated $16 billion in its IPO. With shares of Zoetis now trading just above $31, the company is valued at approximately $16 billion.

However, Zoetis’s IPO went far smoother than that of the social network, at least so far. Zoetis’s Chief Executive officer, Juan Ramon Alaix, told The New York Times on Friday that the company had such a favorable debut because investors believed in its growth story. “We don’t see our leadership being challenged,” he added. “In my opinion, it’s a very attractive investment opportunity.”

Pfizer remains the company’s single-biggest shareholder with an 80 percent stake. However, the drug manufacturer is expected to divest some of its holdings in the next 18 months. Shares of Pfizer were trading up on Friday as well.

Merck (NYSE:MRK) Closing Price $41.83

Following a disappointing fourth-quarter earnings release, shares of Merck tumbled three percent. The pharmaceutical manufacturer reported Friday that it generated $1.4 billion, or 46 cents per share, in the fourth quarter. Its results were down significantly from the year-ago quarter, when the company earned $1.51 billion, or 49 cents per share.

Like its competitors Eli Lilly (NYSE:LLY) and AstraZeneca (NYSE:AZN), Merck’s fourth quarter was marred by patent expirations. The company saw sales slide 5 percent in the three-month period to $11.74 billion, as revenue from its asthma drug Singulair, which lost patent protection last year, fell 67 percent. But Merck’s future looks more bleak than that its rivals. AstraZeneca has plans to boost revenue by acquiring small- or mid-sized companies and Eli Lilly has a well-populated new drug pipeline, according to its chief executive John Lechleiter. In comparison, Merck has had problems developing new products.

During the earnings conference call, Merck announced that it would delay filing for approval of its experimental osteoporosis drug odanacatib in order to conduct further trials. The company also suffered a pipeline setback in December, when its cholesterol drug Tredaptive failed to prevent strokes and heart attacks in a clinical trials.

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