Merck sales hit by generic competition in US, Europe
- Merck & Co. saw revenues drop by 1% in the first quarter, reflecting sharply lower sales for the blockbuster anti-inflammatory drug Remicade and foreign exchange pressures. Net income increased by 18% however, due to lower marketing and administrative expenses.
- Although Merck noted positive signs from the closely-watched launch of its hepatitis C drug Zepatier, first quarter sales totaled only $50 million. The company priced Zepatier competitively at nearly half the cost of Gilead's Harvoni, aiming to eke out market share in the U.S.
- In the immuno-oncology race, Merck's Keytruda continued to trail Bristol-Myers Squibb's Opdivo despite strong sales growth. Keytruda brought in $249 million last quarter, triple last year's figure but lower than the $704 million Opdivo raked in.
Biosimilar competition has dealt a significant blow to Merck's Remicade in Europe (Johnson and Johnson markets the drug in the U.S.). Sales were down by 30% to $349 million, compared to $501 million a year ago. Merck cited the "accelerating impact" of off-brand competition for the steady quarter-by-quarter decline in revenue.
The company also warned of "significant losses" in future sales of its allergy drug Nasonex and antibiotic Cubicin following the entry of generic Nasonex in the U.S. in March and the expiry of patent protection for Cubicin this coming June. The two drugs combined for $521 million in first quarter sales.
With these challenges, Merck hopes its new drugs Zepatier and Keytruda can help offset losses elsewhere.
Gilead has dominated the hepatitis C market with its highly effective drugs Harvoni and Sovaldi. But both are pricey - something Merck appears to be attempting to exploit. At $54,600 per treatment, Zepatier is almost half the cost of Harvoni and offers comparable efficacy. This should carry weight among insurers and pharmacy benefit managers in the current price-sensitive market.
However, unlike Harvoni, Zepatier does require liver function testing on a regular basis.
Gilead and rival AbbVie both reported lower sales of their hep C meds this quarter, perhaps reflecting competition from Merck. In its quarterly report, Gilead indicated revenue from Harvoni had been hit by higher U.S. rebates and shifts in payer coverage. But the sharp U.S. decline seen by Gilead may be more reflective of lower patient starts than the initial impact of Zepatier.
There were bright spots elsewhere for Merck. In vaccines, both Gardasil and ProQuad posted higher sales. And the diabetes drug Januvia, a top-earner for Merck, notched a small gain.
But the biggest year over year gains came from the immuno-oncology drug Keytruda. Currently indicated for second-line treatment of of metastatic non-small cell lung cancer and advanced melanoma, Keytruda is in development for a much wider range of cancer indications.
Merck has filed for approval in head and neck cancers, beating rival Opdivo to regulatory review by several months. The FDA has also granted a breakthrough therapy designation to Keytruda for relapsed or refractory classical Hodgkin lymphoma.
Continued growth from both Keytruda and Zepatier will be instrumental in helping offset generic competition. For the year, Merck now expects revenues to reach between $39 billion and $40.2 billion.
- Reuters Merck sales disappoint as Januvia, Remicade fall short
- Wall Street Journal Merck Revenue Falls on Generic Competition, Currency
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