New Jersey based drug-maker Merck is reporting both a dip in profits and what could be a lucrative collaboration.

The company reported a 14 percent decline in fourth-quarter profits.

Competition from generic drugs is continuing to cut into the company's sales.

But things could be looking up for Merck; the company announced an alliance with three other drugmakers to test an experimental cancer drug.

The drug is meant to restore the immune system's natural ability to spot and target cancer cells.