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The outlook for both years excludes the establishment of any reserves for potential liability relating to the Vioxx litigation and also does not include the impact of any potential acquired research expense relating to the anticipated Sirna Therapeutics acquisition. Further, the company said that it expects cumulative tax savings in the range of $4.5-$5 billion from 2006 to 2010 on the implementation of the cost reduction program and reaffirmed its goal to eliminate 7,000 jobs by the end of 2008 as part of its restructuring program.

Accordingly, for fiscal year 2006, the Whitehouse Station, New Jersey-based company reaffirmed its earnings outlook on a reported basis in the range of $2.18-$2.25 per share.

Excluding restructuring charges related to site closures and position eliminations, the company reaffirmed its earnings outlook in the range of $2.48-$2.52 per share.

On average, twenty-one analysts polled by First Call/Thomson Financial estimate the company to report earnings of $2.51 per share for the year. For fiscal year 2007, the company provided earnings outlook on a reported basis in the range of $2.

36-$2.49 per share. Excluding restructuring charges related to site closures and position eliminates, the company forecast earnings in the range of $2.

51-$2.59 per share. Street expectations of earnings for the year are $2.

55 per share. The company noted that the outlook for both the years does not reflect the establishment of any reserves for any potential liability relating to the Vioxx litigation and also excludes the impact of any potential acquired research expense relating to the anticipated Sirna Therapeutics acquisition. Merck said that its current products, anticipated new product introductions and cost-savings initiatives would enable it to deliver compound annual double-digit earnings growth, excluding charges and one-time items, by 2010 and added that beyond 2010, it expects to deliver sustained revenue and earnings growth buoyed by its growing pipeline.

Commenting on the company's long-term financial prospects, Judy Lewent, executive vice president and chief financial officer, said, "As we disclosed last year, Merck's new and in-line pharmaceutical products and vaccines are expected to drive revenue at a compound annual growth rate of 4-6% from 2005 through 2010, including 50% of the revenues from the joint ventures from which Merck derives equity income. We also expect that we can fully support our expanding pipeline with mid single-digit compound annual growth in research funding over the same period. By sustaining our cost management initiatives, Merck expects to fully capitalize on the promise of our expanding product portfolio while maintaining marketing and administrative expense flat in 2010 relative to the 2006 base.

We expect bottom-line earnings growth to begin in 2007, excluding restructuring charges and the impact of any potential acquired research expense relating to the anticipated Sirna Therapeutics acquisition." Merck said that it continues to expect the initial phase of the cost reduction program, revealed in 2005, to yield cumulative pretax savings in the range of $4.5 billion-$5 billion from 2006 through 2010, and added that as previously stated, a significant portion of the total restructuring savings through 2010, or approximately $2 billion, would result from the implementation of the manufacturing supply strategy.

Merck said that it continues to expect that these savings in manufacturing would enable its gross margin after fiscal year 2008 to return to levels consistent with the gross margin levels prior to the loss of U.S. market exclusivity for Zocor.

Merck said that it remained on track to cut 7,000 positions by the end of 2008 as part of its global restructuring program and added that it eliminated approximately 3,900 positions since the inception of the program through September 30. Further, the company said that it anticipates pretax restructuring costs for 2006 to be in the range of $900 million-$1 billion, and for 2007 in the range of $300 million-$500 million. The company expects cumulative pretax costs of the restructuring activities to be in the range of $1.

9 billion-$2.2 billion on completion of the initial phase of the restructuring through the end of 2008. Approximately 70% of the cumulative pretax costs are non-cash, and related primarily to accelerated depreciation for the facilities intended for closure, the company said.

Merck said that it now anticipates capital expenditures of approximately $1.1 billion in 2006, down from $1.3 billion that it previously disclosed.

For 2007, the company said that it estimates capital expenditures to be $1.2 billion. Total reduction in capital over the period from 2005 to 2008 is expected to be $1.

4 billion compared to the company's expectations for long-range capital spending at the end of 2004. Merck stated that it remained on track to generate $1.2 billion in aggregate procurement savings across the company by 2008.

The company also provided sales forecasts for its major products for 2006 and 2007. For 2006, the Merck expects worldwide sales of Singulair in the range of $3.4-$3.

7 billion, sales of Cozaar/Hyzaar in the range of $3-$3.3 billion, sales of Fosamax in the range of $2.8-$3.

1 billion, sales of Zocor in the range of $2.6-$2.9 billion and sales of other reported products in the range of $6.

6-$6.9 billion. Merck said that it receives revenues at predetermined percentage of the US sales of certain products, including Nexium, from Astra Zeneca and added that it expects these revenues to be in the range of $1.

5-$1.7 billion. Equity income from affiliates, including the results of the Merck and Schering-Plough collaboration and SP-MSD, is anticipated to be approximately in the range of $2.

1-$2.4 billion for 2006. Moving on to 2007, the company forecast worldwide sales of Singulair in the range of $3.

7-$4 billion, sales of Cozaar/Hyzaar in the range of $3.1-$3.4 billion, sales of vaccines in the range of $2.

8-$3.2 billion, sales of Fosamax of $2.6-$2.

9 billion, sales of Zocor in the range of $0.6-$0.9 billion and other reported products in the range of $5.

2-$5.6 billion. For 2007, Merck said that it expects revenues under its agreement with Astra-Zeneca in the range of approximately $1.

6-$1.8 billion and equity income from affiliates in the range of approximately $2.6-$2.

9 billion. The company said that it expects continued growth in newer franchises, including the on-going launches of Rotateq, Zostavax, Gardasil, Januvia and other potential new launches. Merck disclosed that it intends to continue with its stock buyback program in 2006 and 2007.

As of November 30, 2006, the company had current buyback authorizations of $6.6 billion. Among the company's peers, Bristol-Myers Squibb Co.

( | | | ), lifted its fiscal year 2006 earnings guidance for earnings per share from continuing operations, on a GAAP basis, to a range of $0.97-$1.02 per share from no less than $0.

95 as previously provided. However, the raised guidance falls behind the outlook issued by the company prior to shipping of generic Plavix. The company had reported a decline in third-quarter sales on lower sales of its main revenue driver, blood thinner drug, Plavix.

Another company in the industry, Pfizer Inc. ( | | | ), earlier this month reaffirmed its financial guidance into 2009. The company said it continues to expect revenues in 2007 and 2008 that are comparable to 2006, a return to revenue growth in 2009, and high single-digit average growth in adjusted diluted earnings per share over the next two years.

Pfizer also announced a pipeline of 169 potential products in 11 therapeutic areas, launching six new products a year starting in 2011. Earlier, the company had revealed plans to slash 20% of its U.S.

sales force, numbering around 2,200 workers. MRK closed Tuesday's regular trading session at $45.39, up $0.

69, on a volume of 9.52 million shares. In Wednesday's pre-market trading, the stock is currently losing $0.

01 or 0.02% to $45.00.

In the 52-week period, the stock has been trading in the range of $27.99-$46.37.