Merck’s Q3 Earning Review: Keytruda, The Key To Merck’s Growth
Merck (NYSE: MRK) reported its Q3’16 earnings on October 26th. The company posted revenue growth of 6% (excluding currency effects) for the last quarter on year-over-year basis. Keytruda, is turning out to be a winner in oncology space and we expect it to be strong growth driver going forward. We also expect growth for Zepatier over the coming period. We expect it to generate about $1 billion in revenue in couple of years. The company has recently lost exclusivity in some of its important drugs. These will drag the revenue growth. Overall, we expect growth in low single digit for the next couple of quarters on a year-over-year basis. Over the last 9-months Merck has generated about $29.7 billion in sales and appears to be in line with achieving its guidance of $39.7 to $40.2 billion. The company posted non-GAAP EPS of $1.07 for Q3’16 up about 11% from $0.96 in same period last year on account of higher sales and reduced marketing expense as percentage of sales.
Our price estimate of $63 per share for Merck is under update
Keytruda – Strongest Arm In Arsenal
- After A 30% Fall In A Year Is Pfizer Stock A Better Pick Over Merck?
- At $100 Does Merck Stock Have Room For Growth?
- Should You Pick Merck Stock Over Coca-Cola?
- Should You Buy Merck Stock After An Upbeat Q2?
- How Has Merck Stock Performed During The 2022-23 Inflation Shock?
- Is Merck Stock A Better Pick Over ABBV?
Keytruda is turning up as a blockbuster drug for Merck. Year-to-date it has generated over $900 million in sales. Listed below are the areas where the drug has FDA approval:
- Melanoma
- Second Line Lung Cancer
- First Line with metastatic non-small cell lung cancer (NSCLC) with PD-L1 > 50%
- Bladder Cancer
- Head & Neck Cancer
With the recent approval, for treatment of first line NSCLC with PD-L1 > 50%, Keytruda should be able to tap large patient pool as it is the only drug in this category right now. Further, after the recent debacle of Bristol-Myers Opdivo, Keytruda has additional tailwind. We expect the drug to add over $4 billion in revenue by 2020.
Challenges On Other Fronts To Drag Revenue Growth
The company lost exclusivity for Cubicin and is now faced with competition from generics. Going forward we expect this billion dollar drug to significantly lose market share. There are also impending expiry for Zetia and Vytrion in the next year. These will drag revenue going forward.
Further, Gardasil, a $2 billion drug, is also faced with challenges as the practitioners will move from three doses to two doses. The company recently increased prices which will counterbalance the volume decline. However, we expect the sales growth to be hit in fiscal 2017.
Januvia is an important drug with close to $4 billion in annual revenue. Here the company is faced with pricing pressure and competition. Despite this we believe large pool of diabetes patients will keep on driving TRx volume and help it maintain sales at close to the present level in near future.
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?
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap | More Trefis Research
Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.