Merck and Companys Valuation after Its 4Q16 Earnings Release PART 6 OF 10

One of Merck and Co.s (MRK) blockbuster drugs, Remicade is one of the top-selling drugs for the treatment of inflammatory disorders. However, after the loss of exclusivity in the European markets in February 2015, Merck has reported a consistent decline in Remicade revenues. Apart from Merck, Johnson &Johnson (JNJ) also has marketing rights for Remicade in several countries outside Europe.

Remicades revenues fell~32% to $269 million in 4Q16, compared to $396 million in 4Q15. This was mainly due to the entry of generic competitors and biosimilars following the loss of exclusivity in European markets.

Merck expects Remicades revenues to keep declining as a growing number of new patients prefer biosimilars over Remicade.

Apart from Remicade, Simponi is a drug from the Inflammatory franchise. Simponis revenues remained flat at ~$186 million in 4Q16, compared to its 4Q15 revenues of $185 million.

Zetia and Vytorin are the blockbuster drugs from Mercks Cardiovascular franchise. Both drugs are used to lower LDL cholesterol levels in the blood.

The combined revenues for these drugs fell to $874 million in 4Q16. For the US markets, the sales for Zetia declined in 4Q16 while the sales for Vytorin grew. Worldwide sales were affected due to loss of exclusivity of Vytorin in the US, while Zetia sales were nearly constant for 4Q16 compared to 4Q15.

The competitors for Zetia include Niaspan from AbbVie (ABBV) and Lipitor from Pfizer (PFE). Investors can consider the VanEck Vectors Pharmaceutical ETF (PPH), which holds ~5.2% of its total assets in Merck.

View post:
Remicade: Driving Down Merck's Immunology Franchise - Market Realist