How Much Can Merck’s Oncology Drugs Revenue Grow Over The Next Three Years?

Merck’s (NYSE:MRK) oncology drugs’ revenue could grow at a CAGR of 10.3% from $8.24 billion in 2018 to $10.95 billion in 2021, according to Trefis estimates. This growth will likely be led by higher sales of Keytruda, as well as higher alliance revenues from Lynparaza and Lenvima. Below we discuss in detail. You can view our interactive dashboard analysis ~ How Much Can Merck’s Oncology Drugs’ Revenue Grow Over The Next Three Years? for more details on the key drivers of the company’s expected performance.  In addition, you can see more of our data for Healthcare companies here.

How Much Has Merck’s Oncology Drugs’ Revenue Grown Over The Last 5 Years?

• Merck’s oncology drugs’ sales have grown from a little under $1 billion in 2014 to $8.24 billion in 2018.
• This represents a CAGR of 73% (2014-2018).
• This can primarily be attributed to a strong uptick in Keytruda sales.

How Does Merck’s Growth In Oncology Drugs Compare To Its Peers?

• Merck’s oncology drugs’ average annual sales growth of 73% is much higher than that of its peers.
• Roche’s oncology drugs’ sales grew at a CAGR of 1.6% from $26.60 billion in 2014 to $28.26 billion in 2018.
• Johnson & Johnson’s oncology drugs’ sales grew at a CAGR of 22.4% from $4.45 billion in 2014 to $9.84 billion in 2018.
• Pfizer’s oncology drugs’ revenue grew at a CAGR of 32% from $2.02 billion in 2014 to $5.99 billion in 2018.
• Bristol-Myers Squibb’s oncology drugs’ revenue grew at a CAGR of 32% from $3.53 billion in 2014 to $10.31 billion in 2018.

What To Expect From Merck’s Oncology Drugs Over The Next Three Years?

• Merck’s oncology sales will continue to grow over the next three years, albeit at a slower pace, in our view.
• The sales will likely grow at an average annual rate of 10.3% from $8.24 billion in 2018 to $10.95 billion in 2021.

What Will Drive The Growth Over The Next 3 Years?

• The growth in oncology drugs’ sales will likely be led by a continued uptick in Keytruda sales, along with higher alliance revenues from Lynparaza and Lenvima, partly offset by declines in Emend and Temodar.
• Keytruda sales have grown at a CAGR of 334% over the past 4 years to $7.17 billion in 2018, and they could grow to as much as $10 billion by 2021.
• In fact, Keytruda’s peak sales are now estimated to be as high as $16 billion by 2025.
• Alliance revenues from Lynparaza and Lenvima could reach $1 billion by 2021, as compared to $336 million in 2018.

How Does The Expected Growth For Merck’s Oncology Drugs Compare To That of Its Peers?

• The expected growth for Merck’s oncology drugs is higher than most of its peers. The reason why Keytruda has done so well in the past, and it could continue to do well in the future, is its presence in lung cancer, which is a large market.
• The drug has 15 approvals in the U.S. for 10 different types of tumors. It has shown superior benefits in treatment over its peers. The drug is currently under 11 different programs in phase 3 trials.
• In first-line non-squamous non-small cell lung cancer, Keytruda in a chemo combination showed 51% reduction in the risk of death, compared with chemo alone.
• Keytruda’s closest competitor is Bristol-Myers Squibb’s Opdivo. Recently, Keynote-426 trial of Keytruda + Inlyta in first-line renal cell carcinoma showed 47% less risk of death, and this compares with data from CheckMate-214 of Opdivo + Yervoy, which showed 29% less risk of death.
• Looking at alliance revenues, Lenvima received the U.S. FDA, European Union, and China approval for hepatocellular carcinoma in 2018. Lynparza also secured the U.S. FDA approval for ovarian cancer in December 2018. This should aid the alliance revenues in the near term.

How Much Does Merck’s Oncology Drugs Contribute To Its Top Line?

• Merck’s oncology drugs’ sales accounted for 2.3% of the company’s total revenues in 2014.
• This increased to 19.5% in 2018, and we expect the figure to be north of 25% in 2021, as the company continues to see higher sales from Keytruda.

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