11. Merck & Co.

Merck
With its new drugs accounting for just 2% of its net present value, according to Evaluate Vantage, the search continues for Merck as it attempts to find eventual replacements for mega-blockbuster Keytruda. (Merck & Co.)

Merck & Co.
Approvals in past 5 years:
9
Value of recent approvals: $3.8 billion
Percent of value from recent approvals: 2%

Nine new drug approvals over the last five years suggest that Merck is on track to remain one of the top five revenue-producing companies in the industry. But a closer look at the new products shows that few if any carry blockbuster potential as Merck’s efforts to find successors to immuno-oncology superstar Keytruda and diabetes treatments Januvia and Janumet have come up short.

Merck’s drug portfolio has a huge net present value of $230.6 billion, but only $3.8 billion of that comes from its drugs approved over the last five years, according to an analysis from EvaluatePharma and Evaluate Vantage.

While the study paints a dreary outlook for Merck, it should be noted that the timelines used don't favor the New Jersey drugmaker. The company's cancer megablockbuster Keytruda, which won approval in 2014, has many more years of patent protection. It rang up revenues of $14.4 billion in 2020, keeping it on track to top sales charts for years to come.

As for Merck's approvals from the last 5 years, crediting the company with nine new FDA nods is somewhat misleading. Three came on the same day in December 2017 when the Pfizer-partnered diabetes drug Steglatro passed FDA muster, along with combo treatments Steglujan and Segluromet. The three meds combined provide $750 million of net present value, Evaluate says.

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Some of Merck’s new drugs have small patient populations and so carry little opportunity for big sales. One example is Recarbrio, considered a last resort for those with urinary tract infections and intra-abdominal infections. After its approval in 2019, Cowen & Co. analyst Steve Scala estimated that Recarbrio’s sales would top out at $150 million in 2024. Evaluate agrees, tagging the med's net present value at just $129 million.

Meanwhile, Merck’s new cardio drug Verquvo is limited to high-risk patients who’ve recently been hospitalized or received diuretics as outpatients for acute decompressed heart failure with reduced ejection fraction. Another limiting factor for the launch is the formidable competition in the market from Novartis’ Entresto and AstraZeneca’s Fraxiga. Upon its approval, SVB Leerink analyst Daina Graybosch projected sales of just $50 million for Verquvo in 2022 and 2023. Evaluate says the drug is worth $860 million.

Merck’s new HIV drugs Pifeltro and Delstrigo, which use the molecular entity doravirine in combination with other HIV treatments, haven’t had much impact since their launch in late 2018. The company considered them bridge drugs as it brings other HIV therapies through the pipeline. Pifeltro is worth $324 million, according to the Evaluate analysis.

Zinplava, which won approval in 2016 to treat clostridium difficile infection recurrence, is worth $647, Evaluate says. Merck picked up rights to the drug from Medarex way back in 2009.

Ervebo was a groundbreaking Ebola vaccine when it won FDA approval in 2019. But with the disease uncommon in developed countries, its sales potential is so limited that Evaluate doesn’t even assign it a present value.

Merck’s new drug with the most potential, according to Evaluate, is Prevymis. The drug prevents cytomegalovirus reactivation in recipients of hematopoietic stem cell transplant. Preyvmis has increased its sales each year, from $72 million in 2018 to $165 million in 2019 to $281 million last year. Its value is $1.09 billion, Evaluate says.

Merck’s most recently approved vaccine, which is not included in the Evaluate study, has a chance to reverse the trend of approvals with small market value. Pneumococcal vaccine Vaxneuvance, which gained a nod for use in adults last month, is ahead of its next-gen rival, Pfizer’s Prevnar 20, in the critical race to reach children. A head start could boost Vaxneuvance into blockbuster territory as it tries to cut into Pfizer’s dominance of the market. Pfizer's market-leading Prevnar 13 rang up sales of $5.9 billion in 2020.

Merck has also scored a recent approval for Welireg to treat cancers caused by the rare von Hippel-Lindau disease. That drug won its FDA approval after Evaluate conducted its analysis.

RELATED: The top 20 pharma companies by 2020 revenue — 4. Merck

Thanks to Merck's growing reliance on Keytruda in recent years, investors and analysts have started raising questions about Merck's plans beyond the cancer stalwart. Back in May, before Merck spun off Organon, then-incoming CEO Rob Davis said the company would eye "value-enhancing business development" with the funds from the split.

Editor's note: This article was updated to show that Keytruda's 2020 sales were $14.4 billion, not $14.4 million as originally stated.

11. Merck & Co.