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Merck: Other Human Health Franchise and Animal Health Segment

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Other human health franchise

As we discussed earlier, the global human health segment is Merck & Co.’s (MRK) core business. Apart from the franchises discussed earlier, Merck also holds blockbuster drugs in other franchise.

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Immunology franchise—Remicade

Remicade is one of the top-selling drugs for the treatment of inflammatory disorders. Its revenue fell over 25% in 2Q15—compared to 2Q14. This was mainly due to the entry of generic competitors and biosimilars following the loss of exclusivity in European markets in February 2015.

Apart from Remicade, Simponi is a drug from the inflammatory franchise. Simponi recorded growth of 20% at constant currencies in 2Q15. This was offset by a fall of 7% from Remicade. The combined revenue for these two drugs was ~$625 million. Remicade is also marketed by Johnson & Johnson (JNJ) in certain countries.

Vaccines

Merck’s vaccine business had a nearly flat performance for 2Q15—compared to 2Q14. The major contributors from the vaccine business are Gardasil and Gardasil 9. They had combined sales of $427 million. ProQuad/MMR II/Varivax had sales of $358 million. The vaccine business sales were partially offset by RotaTeq. Overall, the vaccine business grew 1% at constant currencies. It reported revenue of $1.2 billion in 2Q15.

The competitors for the vaccine business include Pfizer (PFE) and GlaxoSmithKline (GSK), which acquired Novartis’ (NVS) vaccine business.

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Other pharmaceuticals

Other pharmaceuticals include:

  • Isentress – a drug used to treat HIV
  • Nasonex and Singulair – they’re from the respiratory franchise
  • biosimilars

These drugs reported a fall in their revenue for 2Q15—compared to 2Q14. Isentress fell by ~10% at $375 million. Merck divested its ophthalmology business in June last year.

Animal health segment

The animal health segment contributed ~8% of the total revenue in 2014. This contribution rose to ~9% for 2Q15 due to a rise in revenue by 10% at constant currencies. It was mainly driven by Bravecto—a chewable tablet that kills fleas and ticks in dogs for up to 12 weeks.

Merck’s animal health segment competes with companies including Zoetis (ZTS) and Eli Lilly and Co. (LLY). Investors can consider ETFs like the Health Care Select Sector SPDR ETF (XLV). It holds 5.70% of its total investments in Merck.

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