As the ongoing coronavirus pandemic continues to negatively impact businesses across the community, one of the area’s largest employers has announced that they expect to lose billions in revenue due to COVID-19.
In their first-quarter earnings release, Merck & Co. Inc. said they anticipate $2.1 billion in lost revenue due to COVID-19 by year’s end. The total figure comes from the combination of an anticipated $1.7 billion revenue loss for pharmaceuticals and an anticipated $400 million loss in animal health revenue.
“Roughly two-thirds of Merck’s pharmaceutical revenue is comprised of physician-administered products, which, despite strong underlying demand, are being impacted by social distancing measures, fewer well visits and delays in elective surgeries due to COVID-19,” reads the earnings release. “These impacts, as well as prioritization of COVID-19 patients at health care providers, are resulting in reduced administration of many of our human health products.”
With the anticipated losses, the company has reduced their 2020 Full-Year Revenue Range to be between $46.1 billion and $48.1 billion.
The release states that the overall impact of COVID-19 to Merck’s first-quarter revenue was “immaterial.” In fact, first-quarter worldwide sales increased by 11% to $12.1 billion, and first-quarter operating expenses were positively impacted by approximately $100 million due to lower promotional and selling costs, as well as delayed clinical program spending due to COVID-19.
When reached for comment, officials said they assume that the majority of the negative impact will occur within the second quarter, before seeing a gradual return to normal operations through the third quarter and a full return to normal operations in the fourth quarter.
“The COVID-19 global pandemic poses challenges to all of us, including serious threats to the health of people, businesses and economies around the world,” said Kenneth C. Frazier, chairman and chief executive officer of Merck & Co. Inc. “Without question, our industry and our company have a unique ability and responsibility to help the world respond to this pandemic by working collaboratively to deliver solutions to coronavirus infection while also maintaining the supply of medically important products to those who need them.”
Frazier added that the underlying demand for Merck’s portfolio of products remains strong, and the business remains fundamentally sound.
Headquarters Move to have No Local Impact
Merck’s move to consolidate New Jersey campuses to a new headquarters in Rahway will have no impact on the company’s facilities in West Point and Upper Gwynedd.
Pamela Eisele, a spokesperson with Merck & Co., confirmed to North Penn Now that the company does not anticipate any local impacts with the move to a new headquarters.
The move, which is expected to be complete by 2023, will see Merck’s return to the location of their first headquarters.
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