Chief Executive Raymond Gilmartin is struggling to introduce products to replace Merck's top-selling drug, Zocor to treat high cholesterol, which loses patent protection in 2006. Sales of the Vioxx and Arcoxia painkillers will rise to as much as $2.8 billion next year, Whitehouse Station, New Jersey-based Merck said.

``The market was preparing for some sort of doomsday scenario,'' said Steven Lampe, a fund manager at Delaware Investments, which sold its stake in Merck last quarter. ``That didn't happen, and you are getting sort of a relief rally.''

Merck shares rose $1.15, or 2.7 percent, to $43.65 as of noon in New York Stock Exchange composite trading. The stock, which has fallen 19 percent this year, is the worst performer among drugmakers in the Standard & Poor's 500 Index so far this quarter.

Sales of Vioxx and follow-on drug Arcoxia will rise from about $2.7 billion this year, Merck said. Sales of Zocor will be $4.9 billion to $5.1 billion next year. The company expects revenue of as much as $5.2 billion from the drug in 2003. The osteoporosis treatment Fosamax will bring in as much as $3.2 billion in 2004, Merck said.

`Please the Street'

``All revenue ranges given for Merck's five biggest products either encompass our estimates or beat them,'' said Timothy Anderson, an analyst at Prudential Equity Group, in a note to clients. ``This guidance is good and should please the Street.''

Merck said 2003 profit from continuing operations will be at the low end of its previous forecast of $2.90 to $2.95 a share. The company, which trailed only Pfizer Inc. in 2002 global sales, said in October it would cut 4,400 positions and change the way it distributes drugs to wholesalers to save money. That switch started this week and will probably lower earnings in the final quarter of the year by 21 cents a share, Merck said.

Merck's shares climbed steadily through the 1980s and 1990s, reaching a closing high of $89.80 in November 2000. The stock then started to decline, hurt by concern about expiring patents, new product setbacks and competition from Pfizer's Lipitor cholesterol drug. They dropped 6.5 percent to a 52-week low of $42.21 on Nov. 21 when the company stopped work on an experimental diabetes treatment because it was linked to tumors in mice.

Value?

``People have completely forgotten this is one of the greatest franchises in history,'' Delaware Investments' Lampe said. ``That's not to say this company hasn't been having a bad streak, but people have factored in the bad things and driven the stock down. It's gotten to pretty attractive levels.''

Merck's shares now trade at just over 13 times earnings, about half of the average ratio over the past five years, according to Bloomberg data.

In October, Merck reported its fourth quarterly profit decline in seven periods. Third-quarter net income slipped 1 percent to $1.86 billion as sales of the company's top two medicines, Zocor and the arthritis-pain medicine Vioxx, fell.

Merck's profit margin -- net income as a percentage of sales -- has declined each for the past four years. In 1998, that margin was 19.5 percent. Last year, it dropped to 13.8 percent.

Pipeline

Over the past year, Merck reduced sales estimates on Fosamax and the Singulair asthma medicine, as well as Zocor. Still, the company said it now expects Singulair sales of as much as $2.7 billion in 2004, up from as much as $2.2 billion this year.

Merck expects to win approval next year to couple Zocor with Zetia, a cholesterol medicine developed with Schering-Plough Corp. That along with other drugs in the pipeline, such as a vaccine for the human papillomavirus, will help make up for lost Zocor sales in 2006, Chief Executive Gilmartin said in a telephone interview.

``The most important thing around that period of patent expiration is we have on track the filing of the products'' that are now in the third and last stage of testing generally required for regulatory approval, Gilmartin said.