Merck & Co. (MRK.N) beat first-quarter analyst expectations Tuesday, helped along by growing sales in its cancer and vaccines businesses, but plans to make cost cuts that will result in a charge of up to US$1.2 billion.

First-quarter adjusted earnings were US$1.22 a share, topping the US$1.05 per share average of analysts’ estimates.  

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Merck will close some plants and shed workers as part of a cost-cutting effort over the next several years. Because of the cuts, the company said it expects to take a charge of US$800 million to US$1.2 billion by the end of 2023. Analyst expectations for cancer blockbuster Keytruda have gotten higher and higher as the drug gets approved for more uses. Keytruda had sales of US$2.27 billion in the first quarter, just shy of the US$2.32 billion average of analysts’ estimates. Merck’s measles, mumps, and rubella vaccine saw sales surge by 27 per cent, hauling in US$496 million to beat analyst estimates of US$410 million. The drugmaker is the only company licensed to offer the measles vaccine in the U.S., which has seen 704 individual cases through April 26, a record high since 1994.

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Merck shares fell 0.6 per cent to US$76.35 at 9:41 a.m. in New York. The stock is up less than 1 per cent this year to date. Adjusted earnings were up from a year prior as well, when Merck reported EPS of US$1.05 a share. Sales of Keytruda are up 55 per cent over that period.