Costs help Merck and Novartis, hit Lilly

By Bill Berkrot

NEW YORK (Reuters) - Tight cost controls helped Merck & Co (MRK.N: Quote, Profile, Research) and Swiss drugmaker Novartis AG (NOVN.VX: Quote, Profile, Research) to better-than-expected quarterly earnings on Monday, while high expenses contributed to disappointing results from Eli Lilly and Co (LLY.N: Quote, Profile, Research).

Lilly was also hit by disappointing sales of its Byetta diabetes drug, while Novartis and Merck, like much of the industry, are dealing with patent expirations and generic competition for some of their important medicines.

Novartis benefited from the weak dollar as well as its cost-cutting program in posting a net profit of $2.13 billion that easily surpassed analyst forecasts of $1.83 billion.

Merck earned $3.3 billion, or $1.52 per share, up from $1.7 billion, or 78 cents per share, a year earlier. Excluding items, Merck earned 89 cents per share, topping analysts' average forecast by 3 cents, according to Reuters Estimates.

Bear Stearns analyst John Boris said Merck's cost of goods sold was $109 million less than he had expected and taxes were $314 million less, helping to offset revenue weakness.

Merck was hit by plunging sales of its Fosamax osteoporosis drug, now facing generic competition; slowing sales growth of cholesterol drugs it shares with Schering-Plough Corp (SGP.N: Quote, Profile, Research); and lower-than-expected sales of its Gardasil vaccine to prevent the virus that causes cervical cancer.

Lilly earned $1.06 billion, or 97 cents a share, for the quarter compared with $508.7 million, or 47 cents per share, a year before. Excluding special items, Lilly earned 92 cents, missing Wall Street expectations by 4 cents.

It did see solid sales growth in its antidepressant Cymbalta, insulin drugs Humalog and Humulin, and the impotence treatment Cialis.