Merck KGaA stumbles in Q1 as MS injectable Rebif falls to oral rivals

Merck KGaA has been striking deals and pushing R&D in a bid to revive its slumping drug portfolio. But the company's recent efforts aren't bearing fruit--at least not yet. On Tuesday, the German company revealed less-than-impressive first-quarter numbers for top-selling meds, along with earnings that rang in below analysts' estimates.

Merck's earnings rose 5.7% to €853 million ($936 million), but that number fell short of the €863.5 million analysts had expected, Bloomberg says. Sales for the company's flagship products, MS injectable Rebif and cancer drug Erbitux, also took a hit, with Rebif sales falling 15.9% to €430 million and Erbitux dropping 5.9% to €205 million. Rebif is suffering on competition from Biogen's ($BIIB) MS blockbuster Tecfidera, Novartis' ($NVS) Gilenya and Sanofi's ($SNY) Aubagio, as patients opt for pills over injections.

Merck KGaA CEO Karl-Ludwig Kley

Merck KGaA did enjoy a bright point for infertility treatment Gonal-f, with sales for the drug increasing 1.7% for the quarter. Overall, Merck's net sales rang in at €3 billion. The company is looking to emerging markets such as China to drive growth in the coming year, especially as it defends its market share for Rebif in the EU.

And CEO Karl-Ludwig Kley has a few plans in store to revive the company's lagging fortunes. The drugmaker will invest heavily in immuno-oncology R&D during the coming year, Kley said in a statement, working with Pfizer ($PFE) to develop lung cancer drug Xalkori and collaborate on experimental therapy avelumab to drive numbers northward. Merck KGaA's collaboration with Pfizer, along with five other clinical trials slated to begin between 2015 and 2016, could help. But the company's R&D gamble might come at a price, Primavenue analyst Marietta Miemietz told Bloomberg.

"If they fail in oncology and in MS, and they don't find anything transformational, then it's one big tail without anything new coming through," she said. "The biggest risk is that they get left behind in the innovation race."

- here's Merck KGaA's earnings statement (PDF)
- read the Bloomberg story

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