Why We Believe Merck Could Grow In Future?
Key Takeaways from Merck’s Earnings
- 1% growth in revenue, 79% rise in EPS
- Sales for new drugs Keytruda and, Zepatier grew more than 100%
- Januvia showed 4%-5% growth in terms of TRx volumes
- Remicade fell by 80% due to strong competition and patent expiration
- Patents for Vyotorin, Zetia and Cubin will expire by next year, but we continue to remain bullish on Merck due to strong phase 3 pipeline and huge potential for growth in new drugs.
1) Keytruda To Steal The Show
- Cancer drug Keytruda could contribute $3.5 billion in additional revenue by 2020, implying CAGR of 51%
- Primarily targeted for the most common type of cancer, lung cancer
- Expected to launch in 50 markets by the end of 2016
- Approved recently for head and neck cancer
More than 300 clinical studies under way to expand Keytruda’s usage
2) Zepatier Could Reach Peak Sales of ~$2 Billion by 2020
- Zepatier received FDA Approval in January, 2016 for treatment of hepatitis C (HCV) with genotype 1 and 4
- Expected to be launched in Europe by early 2017
- Market potential is strong with 3 million patients in the U.S.
- Nearly 200,000 patients are treated annually, and this figure has grown at CAGR of 10% over the plast 5 years.
- Zepatier list price is cheaper than that of its competitors
3) Strong Phase 3 Pipeline
Sources:
[1] Merck & Co. (MRK) Kenneth C. Frazier on Q2 2016 Results – Earnings Call Transcript, Seeking Alpha, July 29, 2016
[2] Sec Filings
Have more questions about Merck? See the links below.
- What’s Merck’s Revenue And Earnings Breakdown In Terms Of Therapeutic Areas?
- What Led To Nearly 15% Decline In Merck’s Revenues & EBITDA In The Last 5 Years?
- How Has Merck’s Revenue Composition Changed In The Last 5 Years?
Notes:
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