5. Merck & Co.
Headquarters: Kenilworth, NJ
2016 revenues: $39.8 billion
2015 revenues: $39.5 billion
Merck joined several of its pharma peers in posting minimal growth last year. as a political cloud appeared over the drug industry. The company expanded its revenues just 1% over the previous year, but sees reasons to be optimistic about the future.
Merck’s important checkpoint inhibitor Keytruda reached blockbuster-land in 2016 with $1.4 billion in sales, a big leap over 2015’s $566 million. It continues to rack up indications in an I/O battle with Bristol-Myers Squibb’s Opdivo, last year winning a green light in lucrative first-line lung cancer, where the BMS med fell short.
Recently, Merck has been “operating in a period of significant volatility and uncertainty, including the current political and policy environment in the United States,” CEO Ken Frazier told investors and analysts on the company’s year-end conference call. Nonetheless, he believes the Big Pharma will “weather these uncertainties” on the strength of its “broad and balanced” product offerings.
Despite the small revenue growth, Merck was among the top of the pharma pack in share price gains last year, trailing GlaxoSmithKline and Johnson & Johnson in that category.
That Merck was able to grow sales of Januvia last year marks a win in itself as intense competition in the diabetes field has put a hurt on revenues for some of its rivals. Januvia grew 2% to $6.1 billion for the year. The company inked a pay-for-performance deal with Aetna in the fall in an attempt to fend off against erosion from newer diabetes entrants.
Gardasil was another strength for Merck in 2016 as the HPV vaccine franchise posted double-digit growth to $2.17 billion in sales. Merck benefited from increased “pricing and demand” in the U.S., it said in a release, as well as rival GSK’s move to pull competing Cervarix in the country in August.
But going forward, Merck will face a “negative impact” on sales for that product due to the CDC’s decision last year to implement a two-dose schedule, Merck EVP of Global Human Health Adam Schechter told analysts on the conference call.
Sales for Merck’s HIV treatment Isentress, cholesterol drug Zetia/Vytorin, TNF inhibitor Remicade, antibiotic Cubicin and anti-inflammatory Singulair each fell in 2016.
Biosim competition to the big-selling Remicade in the Europe continues to take a toll as the drug lost 29% of its sales last year, falling to $1.268 billion. Merck sells the Johnson & Johnson drug on the continent.
Cubicin, the key prize in Merck’s $9.5 billion buy of Cubist Pharmaceuticals, lost its exclusivity in 2016 and posted sales 4% lower than 2015. Nasal spray Nasonex and Zetia also lost exclusivity last year, Merck reported.
Going into 2017, the company sees its margins improving and is guiding for EPS growth as a result. It turned in GAAP EPS of $2.04 in 2016 and is anticipating a range of $2.47 to $2.62 for this year.
Shortly after announcing its year-end financial results, Merck’s lead HIV therapy came up big in a phase 3 trial, setting up a market battle with Johnson & Johnson’s Prezista.