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Remicade: A Falling Drug in Merck’s Immunology Franchise

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Remicade  

Remicade is one of the blockbuster drugs for Merck & Co. (MRK). It’s one of the top-selling drugs for the treatment of inflammatory disorders. However, after the loss of exclusivity in the European markets in February 2015, Merck reported a constant fall in Remicade’s revenue. Apart from Merck, Johnson & Johnson (JNJ) also has marketing rights for Remicade in certain countries outside of Europe.

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Remicade’s revenue  

Remicade’s revenue fell by ~25% in 2Q14. The revenue fell ~27% in 3Q15. This was mainly due to the entry of generic competitors and biosimilars following the loss of exclusivity in the European markets.

In terms of the market share, Remicade’s share fell to ~95% during 2Q15. It fell to ~90% during 3Q15 in the European markets. Merck expects Remicade’s revenue to fall during 4Q15 and throughout 2016.

Other drugs in the immunology franchise  

Apart from Remicade, Simponi is a drug in the inflammatory franchise. Simponi recorded 25% growth at constant currencies in 3Q15. This was offset by a 13% fall in Remicade. The combined revenue for these two drugs was ~$620 million.

Zetia and Vytorin 

Zetia and Vytorin are the blockbuster drugs from Merck’s cardiovascular franchise. Both of these drugs are used to lower the LDL cholesterol levels in the blood.

The combined revenue for these drugs fell by 2% at constant currencies. For the US markets, the sales for Zetia were flat. The sales for Vytorin fell. The worldwide sales were affected due to Vytorin’s loss of exclusivity in the US. The sales were also impacted by Zetia’s loss of exclusivity in Canada. Zetia’s competitors include Niaspan from AbbVie (ABBV) and Lipitor from Pfizer (PFE).

Merck competes with Bristol-Myers Squibb (BMY), AstraZeneca (AZN), AbbVie, and Pfizer over a different product mix. Investors can consider ETFs like the VanEck Vectors Pharmaceutical ETF (PPH) and the Vanguard Healthcare ETF (VHT) to divest the risk.

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