A Look At Merck’s Late Stage Pharmaceuticals Pipeline
Merck (NYSE:MRK) has a strong late stage pharmaceuticals pipeline, and it could be worth as much as $13 billion, or over 6% of its current market value, according to our estimates. Several drugs in the pipeline are capable of generating more than $1 billion in peak sales. Merck’s drug pipeline value can primarily be attributed to its vaccines, and anti-infectious drugs. We have created an interactive dashboard ~ How Large Is Merck’s Late Stage Pharmaceuticals Pipeline ~ which shows key factors determining the late stage pharmaceuticals pipeline’s value such as expected peak sales, expected growth trajectory, and probability of market approval. You can modify these assumptions to see how it impacts Merck’s pipeline revenue forecast and valuation.
Vaccines Probability-Adjusted Revenue Could Be North of $2 Billion
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Merck’s portfolio of Vaccines in pipeline is the largest with probability adjusted revenues of over $2 billion. The company has 4 vaccines in phase 3 trials or under review, Ebola Vaccine, V212. V419, and V114. Ebola is spreading in the Congo since the past few months, and Merck’s Ebola Vaccine is currently being used for vaccination. The company is awaiting the U.S. FDA approval for the drug, which could boost the future sales. V212 is a heat-treated varicella-zoster virus (VZV) vaccine, used for the prevention of herpes zoster and herpes zoster-related complications. V114 is a pneumococcal conjugate vaccine, which will compete with Pfizer’s blockbuster drug, Prevnar.
Anti-Infectious Drugs Probability-Adjusted Revenue Could Be North of $1 Billion
Anti-infectious is one of the key pharmaceuticals portfolio for Merck with sales of over $11 billion in 2017. The company’s late stage anti-infectious pipeline currently includes 2 new compounds, Relebactam, and Doravirine. Both of these drugs have a potential to generate over $1 billion in peak sales. Doravirine is a non-nucleoside reverse transcriptase inhibitor for use in the treatment of HIV/AIDS. It helps to decrease the amount of HIV and develops the immune system. The drug was approved by the U.S. FDA in August 2018.
Looking at cardiovascular pipeline, Vericiguat is the only new compound in late stage studies. It is an oral soluble guanylate cyclase stimulator for chronic heart failure.
Overall, Merck’s late stage pipeline drugs could generate around $6 billion in peak sales. However, we consider 50% probability of the drugs being approved, which you can modify on our interactive dashboard, to arrive at around $3 billion of probability-adjusted revenues. While Keytruda remains the star performer for Merck in the near term, some of its drugs have lost or are about to lose their patent exclusivity. Therefore, the company is banking on these late stage pipeline drugs to aid sales growth. We estimate cash flows to be in the high 20s percent of the probability-adjusted revenues of the pipeline drugs, and discount the cash flows to arrive at a total pipeline value of $13 billion for Merck.
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