United States drug firm Merck & Co on 26 October recorded a 4% drop in total sales to USD11.5 billion during the third quarter, on the back of a decimation in revenues from genericised Singulair and Cozaar/Hyzaar.
IHS Global Insight perspective | |
Significance | Like US compatriots Eli Lilly and Bristol-Myers Squibb, Merck & Co's quarterly results reflect the impact of the much-heralded "patent cliff", with a series of off-patent products in its portfolio being hit by generic entry. However, the company's ability to extend the patent life of migraine drug Maxalt and anti-emetic Emend for six months through paediatric exclusivity surprised some market analysts and meant that the top line was not as bad as feared. |
Implications | The company's top-line decline means that management has adapted its cost base, and ongoing restructuring means there were declines in research and development, marketing, and production spend ranging from the low to high single digits. As a result, overall organic growth was pretty much unchanged from the same period of 2011. |
Outlook | Merck has a highly active pipeline, and the company's ability to contain spend while developing these new products will be key to its near-term growth. Short-term catalysts include cardiac outcomes data from THRIVE for Tredaptive, as well as ongoing data releases from IMPROVE-IT (of Vytorin versus Zocor). Mid-2013 should also see US FDA action on orexin antagonist suvorexant in insomnia. Other key pipeline candidates include a series of Phase III drugs, including odanacatib and anacetrapib in osteoporosis, anti-IL-23 drug MK-3222, BACE inhibitor MK-8931 for Alzheimer's, preladenant in Parkinson's, and MK-3415A in infectious diseases. |
United States drug firm Merck & Co on 26 October recorded a 4% drop in total sales to USD11.5 billion during the third quarter, on the back of a decimation of revenues from genericised Singulair (montelukast) and Cozaar/Hyzaar (losartan). On the cost side, the production spend was down 5%, the marketing and administrative spend was down 8%, and research and development R&D costs were down 2%. Merck's ongoing restructuring costs were also down 8%. Overall net income was up 2%, while underlying organic growth was essentially unchanged at USD2.37 billion for the quarter.
Merck & Co Q3 results (USD mil.) | ||
Sales | 11,488 | 12,022 |
GAAP net income | 1,7129 | 1,692 |
Non-GAAP | 2,932 | 2,908 |
Pharmaceutical sales | 9,875 | 10,354 |
Marketing and administrative spend | 3,063 | 3.340 |
Material and production spend | 4,137 | 4,352 |
R&D | 1,918 | 1,954 |
Organic growth* | 2,370 | 2,376 |
Source: Merck & Co, except *IHS Global Insight | ||
Across Merck's vast product portfolio, there were significant declines in older and genericised products. Singulair and Clarinex (desloratadine) were down 55% and 32% respectively, while Fosamax (alendronate) and Avonex (Interferon beta-1a) were down 50% and 29%, respectively. Cozaar/Hyzaar and Zocor (simvastatin) were down 27% and 22%, respectively. However, there was significant upside due to six-month paediatric exclusivities in the Emend (aprepitant) and Maxalt (rizatriptan) franchises, which therefore recorded 12% and 7% growth, respectively.
Merck & Co Q3 product sales (USD mil.) | ||
Product/Division | Q3 2012 | % Change Y/Y |
Primary Care/Women's Health | ||
Cardiovascular | ||
Zetia (ezetimibe) | 614 | 5 |
Vytorin (simvastatin + ezetimibe) | 444 | -10 |
Diabetes/Obesity | ||
Janumet (sitagliptin + metformin) | 392 | 16 |
Januvia (sitagliptin) | 919 | 15 |
Respiratory | ||
Singulair (montelukast) | 602 | -55 |
Nasonex (mometasone) | 375 | 10 |
Clarinex (desloratadine) | 134 | -32 |
Asmanex (mometasone) | 48 | - |
Dulera (mometasone + formoterol) | 39 | - |
Women's Health/Endocrine | ||
Fosamax (alendronate) | 184 | -29 |
NuvaRing (etonogestrel, ethinyl estradiol) | 146 | -2 |
Follistim (follitropin) | 116 | -14 |
Implanon (nexplanon) | 76 | 16 |
Cerazette (desogestrel) | 67 | -14 |
Other | ||
Maxalt (rizatriptan) | 156 | 7 |
Arcoxia (etoricoxib) | 112 | 2 |
Avelox (moxifloxacin) | 73 | -50 |
Hospital/Speciality | ||
Immunology | ||
Remicade (infliximab) | 519 | -13 |
Simponi (golimumab) | 74 | 15 |
Infectious Disease | ||
Isentress (raltegravir) | 337 | 16 |
PegIntron (interferon) | 162 | 1 |
Cancidas (caspofungin) | 145 | 8 |
Victrelis (boceprevir) | 111 | - |
Invanz (ertapenem) | 101 | 10 |
Primaxin (imipenem + cilastatin) | 88 | -12 |
Noxafil (posaconazole) | 59 | 9 |
Oncology | ||
Temodar (temozolomide) | 237 | 2 |
Emend (aprepitant) | 102 | 12 |
Other | ||
Cosopt/Trusopt (timolol) | 124 | -18 |
Bridion (sugammadex) | 58 | 29 |
Integrilin (eptifibatide) | 53 | -9 |
Diversified Brands | ||
Cozaar/Hyzaar (losartan) | 336 | -27 |
Propecia (finasteride) | 108 | -7 |
Zocor (simvastatin) | 103 | -22 |
Claritin Rx (loratadine) | 87 | -14 |
Remeron (mirtazapine) | 57 | -19 |
Proscar (finasteride) | 51 | -6 |
Vasotec/Veseretic (enalapril) | 53 | -27 |
Vaccines | ||
Gardasil (HPV) | 284 | 31 |
ProQuad/MMRII/Varivax | 255 | 1 |
RotaTeq | 142 | -19 |
Zostavax | 76 | 87 |
Pneumovax | 112 | 20 |
Animal Health | 821 | -1 |
Consumer Care | 554 | 7 |
Source: Merck & Co | ||
Outlook and implications
Merck & Co has a highly active pipeline, and the company's ability to contain spend while developing these new products will be key to its near-term growth. Short-term catalysts including cardiac outcomes data from THRIVE for Tredaptive, as well as ongoing data releases from IMPROVE-IT—Vytorin (ezetimibe + simvastatin) versus Zocor (simvastatin). Mid-2013 should also see US FDA action on orexin antagonist suvorexant in insomnia. Other key pipeline candidates include a series of Phase III drugs, including odanacatib and anacetrapib in osteoporosis, anti-IL-23 drug MK-3222, BACE inhibitor MK-8931 for Alzheimer's disease, preladenant in Parkinson's disease, and MK-3415A in infectious diseases.
Related articles
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