Merck posted second-quarter profit that beat analysts' estimates as the prescription-drug division's earnings climbed, prompting the German company to raise its forecast for the full year.

Earnings before interest, taxes, depreciation and amortisation, and excluding some costs, rose 29 per cent to €1.16 billion in the three-month period, boosted by the acquisition of Sigma-Aldrich in November, the Darmstadt, Germany-based company said in a statement on Thursday. That's higher than the €1.1 billion average of analysts' estimates compiled by Bloomberg.

The results may bolster chief executive officer Stefan Oschmann’s efforts to pare the debt accrued from last year’s $17 billion acquisition of Sigma-Aldrich. Sales at the company’s biggest business, its pharmaceuticals unit, have been weighed down by the stronger US dollar and rising competition for its top-selling medicine, Rebif.

The German company raised the range of its forecast for sales this year to €14.9 billion to €15.1 billion, from an earlier projection of €14.8 billion to €15 billion. Ebitda before special items will climb to €4.25 billion to 4.4 billion, instead of the earlier forecast of €4.1 billion to €4.3 billion.

Drugs’ profitability

Revenue from the healthcare unit declined by 2.7 per cent in the quarter to €1.8 billion. But profit climbed by 16 per cent to 557 million euros, partly because of the sale of a minority stake held by its venture fund.

Merck is looking to a $2 billion-collaboration pact with Pfizer Inc. for developing cancer therapies to start contributing to growth next year, when the first of the treatments is expected to reach patients, ending a 10-year drought in new medicines at the company. Multiple sclerosis drug Rebif, which faces competition from oral treatments, as well as cancer drug Eribtux and fertility treatment Gonal-f continued to account for the biggest share of prescription-drug sales in the most recent quarter.The performance of key drugs (in millions of euros):Rebif 2Q sales of 441 v. estimated 433.8Erbitux sales of 232 v. estimated 222.3The company's net income in the second quarter was eroded by a "sharp increase" in variable-compensation costs because of the gains in the stock price, Merck said.

Bloomberg