Merck & Co.'s (MRK) third-quarter profit more than tripled on a gain from the sale of the drug maker's stake in an animal-health joint venture, while a continued rebound in a blockbuster asthma drug helped overall sales inch higher.

The company's improved results came as it plans to complete its takeover of Schering-Plough Corp. (SGP) by the end of the year, in a deal announced in March. Merck made the deal to help bolster its research pipeline and diversify its product lineup in the face of challenges such as generic competition and setbacks in bringing new drugs to market.

Earlier Thursday, Schering-Plough reported declining sales and profits for the third quarter, but said results excluding one-time items and negative currency trends had improved.

Both companies reported a decline in sales for their cholesterol-drug joint venture, which continues to be under pressure due to clinical studies last year that raised questions about the safety and effectiveness of Vytorin and Zetia.

Shares of Merck, Whitehouse Station, N.J., inched up less than 1% in pre-market trading to $32.88

For the three months ended Sept. 30, Merck reported net income of $3.4 billion, or $1.61 a share, up from $1.09 billion, or 51 cents a share, a year earlier. The latest quarter included a gain of $1.7 billion from Merck's sale of its 50% interest in the Merial animal-health joint venture to Sanofi-Aventis SA (SNY), which already owned the other half.

Merck made the deal with Sanofi to clear the way for regulatory antitrust clearance for the Schering deal, because Schering has its own animal-health operations. But Merck and Sanofi structured their deal so that they may effectively re-form Merial as a joint venture after the Schering deal closes, probably with divestitures required.

Excluding the gain and other items in both periods, earnings would have been 90 cents a share in the latest quarter, versus 80 cents a share a year earlier and well ahead of the mean estimate of analysts surveyed by Thomson Reuters of 82 cents.

Sales rose 2% to $6.05 billion, ahead of the Thomson estimate, though negative currency-exchange trends trimmed growth by 3 percentage points. U.S. sales rose 4% while non-U.S. sales were roughly flat.

Merck's biggest product, allergy and asthma medication Singulair, posted sales growth of 5% to $1.09 billion, continuing a rebound that picked up in the second quarter. Last year, sales were under pressure partly from safety concerns prompted by U.S. regulatory alerts.

Sales also rose for diabetes drugs Januvia and Janumet, and HIV drug Isentress. But sales declined for blood-pressure drugs Cozaar and Hyzaar, and rotavirus vaccine Rotateq.

Merck's cervical-cancer vaccine Gardasil continued to decline, posting sales of $311 million for the quarter, down 22%. Merck has had difficulty convincing college-age women and those in their 20s to get the shot, after having brisk success in adolescent girls following the vaccine's 2006 introduction. Gardasil was recently approved by the Food and Drug Administration for use in males to prevent genital warts, but on Wednesday a Centers for Disease Control advisory committee declined to recommend that males get routine vaccination.

Merck reported combined sales of cholesterol drugs Vytorin and Zetia of $1 billion, down 7% from a year earlier. Schering-Plough reported slightly different figures -- but still a decline -- because it includes sales in regions that aren't part of the joint venture. Neither company records sales from the venture but results are reflected elsewhere on their income statements.

Merck tightened its 2009 earnings forecast to $3.20 to $3.30 a share, excluding one-time items, versus a prior forecast of $3.15 to $3.30 a share. When items such as the large animal-health sale gain are factored in, Merck sees 2009 earnings of $3.69 to $3.89 a share. Merck reaffirmed its 2009 revenue forecast of $23.2 billion to $23.7 billion.

-By Peter Loftus, Dow Jones Newswires; 215-656-8289; peter.loftus@dowjones.com
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