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Should Investors Be Interested in Merck in Fiscal 2016?

PART:
1 2 3 4 5 6 7 8
Part 5
Should Investors Be Interested in Merck in Fiscal 2016? PART 5 OF 8

Merck Continues to Dominate with Its Januvia Franchise

DPP-4 inhibitors 

Despite increasing competition and intense pricing pressures, Merck’s (MRK) Januvia franchise continued to maintain its leadership in the DPP-4 inhibitor class of diabetes drugs.

On October 17, 2006, the FDA approved the first DPP-4 inhibitor, Januvia, either as monotherapy or in combination with metformin or peroxisome proliferator-activated receptor gamma (or PPAR) agonist, for controlling blood sugar in patients suffering from type 2 diabetes. On March 30, 2007, the FDA approved Janumet, a combination pill comprised of Januvia and metformin for type 2 diabetes patients. Januvia and Janumet compete with other type 2 diabetes drugs such as AstraZeneca’s (AZN) Onglyza, Boehringer Ingelheim and Eli Lilly’s (LLY) Tradjenta, and Takedia Pharmaceuticals’ (TKPYY) Vipidia. To learn more about Januvia and Janumet, read Merck’s Januvia and Janumet: An Investor’s Perspective.

Merck Continues to Dominate with Its Januvia Franchise

Revenue growth trends

The above chart shows the revenue growth trends for Januvia and Janumet since 2013. The Januvia franchise continues to witness solid demand in international markets. In 3Q16, the Januvia franchise benefited by about $30 million in revenues due to customer purchases in the Japanese market. However, the positive development was offset by a loss of sales in Venezuela.

Merck has completed formulary discussions for 2017. It expects that access for Januvia will remain similar to what it witnessed in 2016. Revenue growth in the US might be slower due to pricing pressures. However, the company projected strong volume growth for the Januvia franchise in future years.

Strong demand for the Januvia franchise is expected to have a positive impact on Merck’s share prices and the iShares Russell 1000 Value ETF (IWD). Merck accounts for ~1.5% of IWD’s total portfolio holdings.

In the next part, we’ll discuss growth prospects for Zetia—Merck’s leading cardiovascular drug.

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