A Quick Look At Merck & Pfizer’s New Diabetes Drug

Pfizer (NYSE:PFE) and Merck (NYSE:MRK) recently launched their jointly-developed diabetes drug Ertugliflozin. The drug will be marketed under the name Steglatro, and marks the companies’ foray in the SGLT2 inhibitor market. Ertugliflozin will compete with drugs including Farxiga, Invokana and Jardiance. It is important to note that the drug has been approved for both single therapy and combination therapy (in combination with Merck’s Januvia or generic metaformin). With DPP-4 inhibitor class diabetes drugs such as Januvia and Janumet, Merck already has a strong presence in the diabetes 2 market, and established sales and marketing channels. This should help in a quick ramp up of the drug. We estimate peak sales of nearly $2 billion, which suggests that the incremental revenue and value impact will be somewhat limited given the size of Pfizer and Merck overall. However, while Ertugliflozin will help augment Merck’s existing diabetes portfolio, it will help Pfizer gain ground in a growing and important market. Pfizer has a limited presence in this area, so it’s important to capitalize on the market opportunity provided by the growing incidence of diabetes globally. We expect the company to develop a portfolio of multiple products going forward.

Take a look at our interactive dashboard which shows key factors determining Ertugliflozin’s value such as expected peak sales, expected growth trajectory, and individual share of sales for Merck and Pfizer. You can adjust the assumptions to see how it impacts the drug’s revenue forecast and valuation.

Our price estimate for Pfizer stands at $41, implying a slight discount to the market price.

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