Analysts look beyond Keytruda into Merck's future

The last quarter of 2018 for Merck & Co / MSD was once again devoted to Keytruda's cancer immunotherapy, which allowed the company to achieve healthy growth in sales for the period.

Thanks to the almost constant spread of new indications and its dominance of the major lung cancer market, Keytruda (pembrolizumab) generated $ 2.2 billion in the last quarter, an increase of 66% over one year. all MSD pharmaceutical sales, up 6% to $ 9.8 billion.

Executive Director Ken Frazier strives to point to additional growth areas in MSD's portfolio, particularly when Januvia (sitagliptin), a diabetes star, has shown signs of weakness after a return to growth in the third quarter, falling 4% to $ 1.47 billion. The Gardasil vaccine against the human papillomavirus (HPV) rose by a third to reach $ 835 million. The anticancer drugs Lynparza (olaparib) and Lenvima (lenvatinib), in partnership with AstraZeneca and Eisai, performed well.

There is no doubt that Keytruda provides the bulk of the dynamics of MSD, however, and badysts have repeatedly questioned the company about its results, about its plans to expand and diversify its pipeline at where his heavyweight would begin to slow down, especially when the drug absorbs most of MSD's R & D expenditures.

At the present time, there seems to be little chance of this happening, with MSD anticipating this year nearly a dozen new intermediate and advanced test readings aimed at expanding the company's business. 39 Keytruda use new types of cancer and move the drug earlier in the treatment. track for established indications and explore new combinations.

MSD CFO Rob Davis said on the call that R & D spending would grow faster than sales growth over the next few years as Keytruda's testing program, but that They would slow down later and, in the meantime, operating margins would improve. management.

Ken Frazier, Managing Director of Merck & Co

Nevertheless, some badysts would like to see a larger stretch in the pipeline, Steve Scala of Cowen & Co asking Frazier: "What is missing outside what Merck sees inside?"

In response, the CEO said: "We expect tremendous future growth, not only for Keytruda, Lynparza and Lenvima, but we have behind us a formidable portfolio of internal oncology badets spread across 20 unique mechanisms."

He added that the potential of Gardasil "is really important for the future, but behind that are hiding opportunities in the next generation of pneumococci, VRS, CMV, dengue and others."

Echoing this sentiment, R & D chief Roger Perlmutter said, "We continue to believe that even when we see an important drug like Januvia disappearing from patent, Merck will have multiple sources of growth in the future. "

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