Deal size: $8.4 billion
Date announced: December 8, 2014
Merck & Co. unveiled an $8.4 billion deal to buy out antibiotics-focused Cubist Pharmaceuticals in the early morning hours of Dec. 8, 2014, but by the afternoon, the math on the deal had changed.
The top drug in the deal, Cubicin, had generated more than $700 million in sales over the first nine months of the year, but on that day, a U.S. court invalidated key patents.
Merck opted to move forward with the buyout, but analysts figured that the company may have overpaid by $2 billion to $3 billion. And these days, Cubicin sales are suffering from the generic competition that ensued. Revenues for the drug slipped 28% to $207 million in the first nine months of 2019.
Merck has since won an approval and a label expansion for another antibiotic, Zerbaxa, which hit the market in 2014.
It remains to be seen how much that med will generate or whether it will reach Cubicin’s former heights. Zerbaxa originally carried blockbuster expectations, but its sales weren’t even significant enough for Merck to report as a line item in the third quarter.
Despite the sales challenge, Merck still sees antibiotics R&D as an important field, Joan Butterton, M.D., associate vice president of infectious disease clinical research, told FiercePharma this summer.
Antibiotic resistance is “one of the great public health challenges of the modern era,” she said, and Merck is among the few Big Pharma companies still involved in antibiotic R&D.
Of course, the Cubicin stumble wasn’t big enough to make a major dent in Merck's prospects. The company is soaring now thanks to blockbuster immuno-oncology drug Keytruda, which pulled in $3 billion during the third quarter.