MERCK REPORTED better-than-expected quarterly earnings on strong sales of vaccines and treatments for diabetes and HIV, giving investors greater faith the company can weather looming generic competition for its flagship Singulair asthma drug.

The second-largest US drugmaker also attributed the second-quarter profit beat to a $260 million decline in marketing and administrative expenses. The company is girding for the US patent expiration next month on its biggest product, $5 billion-a-year Singulair, which will open the floodgates to cheaper generics.

Analysts expect the pill to swiftly lose as much as two-thirds of its sales and hurt Merck’s results well into 2013. Adding to the pain, its Maxalt migraine drug, with $600 million in annual sales, goes generic in December, followed by generic competition next year for its Temodar brain cancer medicine, which has near-blockbuster sales of $900 million.

Merck is counting on its respected pipeline of experimental drugs to come through and help offset the vanishing Singulair sales. Over the next 18 months, it aims to seek six drug approvals. – (Reuters)