Merck’s 4Q15 Earnings: Expected Growth Contributors


Jan. 8 2016, Updated 8:06 a.m. ET

Growth contributors  

As we discussed earlier, analysts expect nearly 90% of Merck & Co.’s total 4Q15 revenue to be from the pharmaceutical segment. Since all of the products don’t report positive growth, it’s important to understand the growth contributors. The major growth for the earnings in 4Q15 is expected to be from its blockbuster drugs including Januvia, Janumet, the Gardasil vaccine, and Keytruda—a new drug.

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Januvia and Janumet  

Januvia and Janumet are two blockbuster drugs in Merck’s diabetes franchise. They’re used to lower blood sugar levels in patients with type 2 diabetes. The combined sales for these drugs rose by 17% at constant currencies to ~$1.6 billion for 3Q15. Analysts’ estimate the revenue to increase by 4% to $1.7 billion for 4Q15, including the impact of currencies. The overall contribution of these drugs to the total revenue was ~15.6% in 3Q15. It’s expected to increase to ~16.6% in 4Q15.

The competitors for Januvia and its combination version Janumet are Onglyza—jointly made by Bristol-Myers Squibb (BMY) and AstraZeneca (AZN)—and Galvus from Novartis (NVS).

Gardasil franchise

The Gardasil franchise is Merck’s leading vaccine franchise. It’s used to prevent certain strains of HPV (human papillomavirus). HPV is transmitted sexually. Gardasil’s revenue reported a YoY (year-over-year) growth of ~6% to $625 million in 3Q15. Analysts expect the revenue to grow ~5.9% YoY for 4Q15. Gardasil’s estimated revenue during 4Q15 is $377 million—compared to $356 million during 4Q14. Gardasil 9 accounted for ~80% of the total HPV sales in the US during the last quarter.


Keytruda is a prescription medicine classified under Merck’s immuno-oncology franchise. It’s used to treat non-small cell lung cancer as well as melanoma—a type of skin cancer. Merck launched Keytruda in 4Q14. In 3Q15, the global sales were ~$159 million—a 45% growth over 2Q15. Why is Keytruda expected to be the key growth driver for Merck? We’ll discuss this in the next part.

Investors can consider ETFs like the iShares Core S&P 500 ETF (IVV) or the VanEck Vectors Pharmaceutical ETF (PPH) in order to divest the risk.


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