How Important Is Keytruda For Merck?

Merck’s (NYSE:MRK) Keytruda is its top selling drug with sales of over $7 billion in 2018. Keytruda is used for the treatment of different types of cancers, including lung, head & neck, and melanoma among others. It has become the most important drug for Merck, given its contribution to the company’s overall top line, and rocketing growth in sales in the recent years. With sales growth, Keytruda now has a meaningful impact on the company’s earnings. The growth in sales can be attributed to Keytruda’s superior benefits, and its approvals in several indications, especially lung, which has a large addressable market size. Keytruda has helped Merck post much stronger oncology sales growth, when compared to other pharmaceutical behemoths, such as Pfizer, Roche, and Johnson & Johnson. In this analysis, we analyze Keytruda’s growth, and its contribution to Merck’s top line as well as bottom line. We also compare Merck’s oncology drugs’ sales growth vis-à-vis its primary competitors. You can view our interactive dashboard analysis ~ Why Has Keytruda Become The Most Important Drug For Merck? ~ for more details. In addition, you can see more healthcare companies data here.

Keytruda Sales Have Seen Massive Growth In The Recent Years

• Keytruda (pembrolizumab) is a human PD-1 (programmed death receptor-1)-blocking antibody indicated for the treatment of several cancers, including melanoma, lung, head & neck, gastric, esophageal, and cervical among others.
• Keytruda sales have grown from $55 million in 2014 to $7.2 billion in 2018.
• This represents an overall growth of 130x, and an average annual growth of 334%.

With Sales Rocketing, Keytruda’s Contribution To Merck’s Top Line Also Saw Strong Growth.

• Keytruda’s contribution to Merck’s total sales increased from 0.1% in 2014 to 17.0% in 2018.
• Merck’s total revenues declined from $42.2 billion in 2014 to $39.5 billion in 2015, but rebounded back to $42.3 billion in 2018, reflecting an average annual growth of a mere 0.1%.
• This compares with an average annual growth rate of 334% for Keytruda.
• The slower growth for Merck’s overall sales can be attributed to a handful of drugs, such as Zetia, Vytorin, and Remicade, which lost market exclusivity post 2014, and the decline in their sales due to generic competition weighed on Merck’s overall sales growth.

EPS Attributable To Keytruda Has Also Seen Stellar Growth

• EPS attributable to Keytruda has grown a stellar 160x from <$0.01 in 2014 to $0.74 in 2018.
• We have considered the overall adjusted net income margin of Merck to show the EPS attributable to Keytruda.

Keytruda’s Contribution To Merck’s Overall Earnings Has Also Seen Strong Growth, In Line With The Growth Visible On Revenues.

• Keytruda’s contribution to Merck’s adjusted EPS grew from 0.1% in 2014 to 17.0% in 2018.
• EPS attributable to Merck grew from <$0.01 in 2014 to $0.74 in 2018.
• Merck’s overall adjusted EPS grew from $3.49 in 2014 to $4.34 in 2018.

• 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.

Keytruda’s Stellar Sales Growth Can Be Attributed To Its Demonstrated Results, Which Compare Better Over Its Peers, Its Presence In the Lucrative Lung Cancer Market, And Its Approvals For Many More Indications.

• Keytruda has done well in the past, and it could continue to do well in the future, due to its presence in lung cancer, which is a large market. The global lung cancer drugs market size was $18 billion in 2018.
• Keytruda has 15 approvals in the U.S. for 10 different types of tumors. The drug is currently under 11 different programs in phase 3 trials.
• Keytruda has shown superior benefits in treatment over its peers.
• 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.

The Growth In Keytruda Sales Will Likely Continue In The Coming Years, Given It Is Well Protected From Biosimilars For the Next 9 Years.

• Loss of Exclusivity In:
  • US: 2028
  • EU: 2028
  • Japan: 2032

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