Matt Rourke, Associated Press
FILE - In this Thursday, Feb. 28, 2013, file photo, a Merck logo is seen on a scientist's lab coat in West Point, Pa. Merck reports financial results on Wednesday, Feb. 3, 2016.

Merck & Co. posted an 87 percent drop in fourth-quarter profit compared with last year when the drugmaker had a huge gain from the sale of consumer health business. It beat Wall Street profit forecasts, but came up short of revenue.

The strong dollar and increasing competition for some of its older medicines cut sales of some of Merck's top sellers. That was partly offset by climbing sales of Merck's newest medicines and its top vaccines, but total revenue dipped 3 percent.

The Kenilworth, New Jersey, company is rebuilding its decimated hepatitis C business and building up its cancer and hospital-drug franchises as it transitions to a new product cycle after yet another major restructuring program that cut more than $2.5 billion in annual spending.

The maker of the popular diabetes pill Januvia and the groundbreaking cancer drug Keytruda on Wednesday said net income was $976 million, or 35 cents per share. A year earlier, net income was $7.32 billion, or $2.54 per share. That was boosted by a $10.6 billion gain from selling Merck's consumer to Bayer AG for $11.2 billion, minus a $628 million debt-related loss.

Adjusted for one-time items, income in the latest quarter was $2.61 billion, or 93 cents per share, which was a penny better than Wall Street had expected, according to a poll by Zacks Investment Research.

Revenue totaled $10.2 billion, down from $10.5 billion in 2014's fourth quarter and just shy of the $10.45 billion analysts expected. Merck said the value of sales was reduced by 7 percent due to the strong dollar. Because its products are paid for in local currencies overseas, it lowers their value.

Sales of Merck's top franchise, Januvia and Janumet for Type 2 diabetes, fell 12 percent to $1.45 billion. Sales hit $322 million for Merck's new antibiotic, Cubicin, acquired when Merck bough Cubist Pharmaceuticals a year ago for $9.5 billion.

Sales quadrupled to $214 million for Keytruda, a new cancer drug.

Competition in Europe from biosimilars — near-copies of biologic drugs, which are "manufactured" in living cells, rather than by mixing chemicals — slashed sales of immune disorder drug Remicade by 29 percent, to $396 million.

Merck last week won U.S. approval for its Zepatier, a combination pill for hepatitis C that should grab a share of that lucrative market. Merck had been a leader in hepatitis C until the new generation of injection-free, highly effective drugs hit the market two years ago, wiping out its franchise. Now it's trying to bounce back by offering Zepatier at a much lower list price than rivals.

"The past year was one of considerable progress and execution for Merck," Kenneth C. Frazier, chairman and CEO, said in a printed statement. "In 2016 we will build upon the strong foundation we established last year," by promoting top brands and developing promising experimental drugs.

Merck said it expects full-year earnings of $3.60 to $3.75 per share, with revenue ranging from $38.7 billion to $40.2 billion.

For all of 2015, Merck posted net income of $4.44 billion, or $1.56 per share, and revenue of $39.5 billion.

Merck shares have declined 17 percent in the last 12 months.

Follow Linda A. Johnson @LindaJ_onPharma.

_____

Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research.