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Merck: Analyzing the Company’s Growth Rate

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Merck’s growth rate

Merck & Co. (MRK) achieved 3% growth in its underlying base business at constant exchange rates in 2Q15—compared to 2Q14. The company’s 2Q15 revenue was nearly the same as analysts’ estimates.

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Revenue by segment

The global human health segment, or pharmaceuticals, generate the most revenue. It contributed nearly 85% to the 2014 revenue and ~90.90% to the revenue in 2Q15. This segment includes various franchises like oncology, vaccines, hospital acute care, diabetes, other primary care, and women’s health.

The animal health segment contributed nearly 8% of the total revenue in 2014. This segment contributed ~9.10% of the segment sales at $858 million in 2Q15. Bravecto’s sales rose by 10% in 2Q15—compared to 2Q14.

Growth rate

Merck’s revenue has shown a negative YoY (year-over-year) growth trend since 2011. It was due to various factors including acquisitions and divestitures, loss of exclusivity, and falling sales of products like Remicade, Temodar, Rotateq, and others. This year, Merck expects the top line to be $38.6–$39.8 billion, as stated in its revised financial guidance. The average of this guidance is $39.2 billion. This is ~7% lower than the revenue in 2014.

Merck’s performance depends on the performance of a few of its key drugs including Januvia, Zetia, Remicade, and Janumet. They recorded revenue of over $2 billion each in 2014. Apart from these, there are six other blockbuster products that recorded over $1 billion in revenue in 2014. To learn more, read Products that Affect Merck’s Revenues.

Merck’s revenue fell by ~11% in 2Q15—compared to 2Q14. Pfizer’s (PFE) revenue fell by ~7%, AstraZeneca’s (AZN) revenue fell by ~7%, and Novartis AG’s (NVS) revenue fell by ~5% in 2Q15 due to the changes in foreign exchange. Investors can consider ETFs like the Health Care Select Sector SPDR ETF (XLV). It has investments in big pharma companies—like Johnson & Johson (JNJ), GlaxoSmithKline (GSK), and Merck—in order to divest the risk.

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