Why We Believe Merck Could Grow In Future?

by Trefis Team
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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

 

Merck Post Eanrings Q2

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.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Merck

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