A Look At Merck’s Oncology Segment

by Trefis Team
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Merck’s (NYSE:MRK) Oncology segment accounts for 15% of its value, according to our estimates. Our interactive dashboard of Merck’s business shows how the company’s oncology drugs are forecast to perform in the coming years, compared to the company’s other segments. Below we explain in more detail.

Oncology Drugs Will Likely Account For Larger Percentage of Revenues Going Forward

We expect oncology drugs to account for 15% of Merck’s total revenue by the end of our forecast period in 2024, compared to 5% in 2016.

Oncology Segment Will Outperform Most Of The Other Segments

Merck generates most of its value from Anti-Infective segment, followed by Mature Drugs & Others, and then Oncology. Anti-Infective is the key segment for Merck, which accounts for about a third of the company’s valuation, according to our estimates (see – Why Anti-Infective Drugs Account For A Third of Merck’s Valuation). Immuno-oncology has been one of the key research areas for pharmaceutical companies struggling to find replacements for blockbuster drugs that have lost patent exclusivity in recent years.

We currently estimate the Oncology segment revenues to grow at an average annual rate of 16% for the period of 2017-2024. This compares with a 3% estimated growth for Anti-Infective segment, and zero growth for Merck’s overall revenues during the same period. Within Oncology, Keytruda is the most important drug for Merck (See – Why Is Keytruda Important To Merck?).

Our current price estimate for Merck stands at $64, implying a premium of over 10% to the current market price.

See our complete analysis for Merck

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