Merck & Co. posted an 87 percent drop in fourth-quarter profit compared with last year, when the drugmaker had a huge gain from the sale of its consumer health business. It beat Wall Street profit forecasts, but came up short on revenue.
The strong dollar and increasing pricing pressure and competition for some of its older medicines cut sales of some of Merck’s top sellers. That was partly offset by climbing sales of Merck’s newest medicines and its top vaccines. Revenue, however, dipped 3 percent.
The Kenilworth, N.J., company is rebuilding its decimated hepatitis C business and building up its cancer and hospital-drug franchises as it transitions to a new product cycle after its latest restructuring program. That cut more than $2.5 billion in annual spending.
Amid growing public and political anger over soaring prices, drugmakers are under pressure to limit price hikes or even lower prices for existing drugs, ending a decade as safe, steady investments.
‘‘This is not business as usual, not in the US and not globally,’’ said analyst Steve Brozak, president of WBB Securities, adding, ‘‘Merck gets it.’’
A number of drugmakers now are trying to boost profits through big acquisitions or tax inversions, in which they buy a foreign drugmaker to relocate their corporate address to a lower-tax country, but not their actual headquarters.
Merck, however, is focusing on future cancer treatments and on drugs that can cure infectious diseases at a maintainable cost, Brozak said.
The maker of diabetes pill Januvia and groundbreaking cancer drug Keytruda on Wednesday said net income was $976 million, or 35 cents per share. A year earlier, net income was $7.32 billion, or $2.54 per share, boosted by a gain from selling Merck’s consumer business to Bayer AG for $11.2 billion.
Adjusted for one-time items, fourth-quarter income was $2.61 billion, or 93 cents per share, a penny better than analysts expected.
Revenue totaled $10.2 billion, below the $10.45 billion analysts expected. Merck said the strong dollar reduced revenue by 7 percent.
Sales of Merck’s top franchise, Januvia and Janumet for Type 2 diabetes, fell 12 percent to $1.45 billion. Sales hit $322 million for Merck’s new antibiotic, Cubicin, and quadrupled to $214 million for Keytruda, a new drug that fights advanced skin and lung cancer by boosting the immune system. Merck is testing it against many tumor types and sees cancer as a key growth area.
Competition in Europe from biosimilars — near-copies of biologic drugs, which are ‘‘manufactured’’ in living cells, rather than by mixing chemicals — slashed sales of immune disorder drug Remicade by 29 percent, to $396 million.
Merck last week won US approval for Zepatier, a combination pill for hepatitis C that should grab a sizeable share of that lucrative market. Merck had been a leader in hepatitis C until the new generation of injection-free, highly effective drugs hit the market two years ago, wiping out its franchise. Now it’s trying to bounce back by offering Zepatier at a much lower list price than rivals.
Chief executive Kenneth C. Frazier told analysts during a conference call that Merck’s acquisition strategy is now focused on finding experimental drugs in early stages of testing, where it can apply its expertise to improve them.
‘‘Our goal is to find these kinds of things before there’s a bidding war,’’ Frazier said.