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Januvia and Janumet: Merck’s Blockbuster Diabetes Products

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Januvia and Janumet

Januvia and Janumet are Merck & Co.’s (MRK) blockbuster diabetes drugs. They’re used to lower blood sugar level in patients with Type 2 diabetes. The combined sale of these drugs was ~$6.0 billion for 2015, a 7% growth at constant exchange rates, offset by a 7% negative impact of foreign exchange. This resulted in no change in revenues for these drugs in 2015 over 2014.

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What makes Januvia and Janumet special?

Januvia and its combination version Janumet are classified as DPP-4 inhibitors. DPP-4, or dipeptidyl peptidase-4, is an enzyme that removes incretin from the human body in normal cases for people without Type 2 diabetes. However, people with Type 2 diabetes need these DPP-4 inhibitors to prevent low blood sugar. They’ve been known to sometimes help in weight loss.

Januvia has a very high share in Japan, as DPP-4 inhibitors have more patient days of therapy than other treatments, and Japan has always been a very fast uptake market for DPP-4 usage.

Competitors for Januvia and its combination version Janumet are Onglyza, jointly produced by Bristol-Myers Squibb (BMY) and AstraZeneca (AZN), and Galvus manufactured by Novartis (NVS). Recently, Januvia was confirmed by the American Diabetes Association for its high safety profile and no risk of major adverse cardiovascular events or hospitalization for heart failure. There were few concerns with the safety profile for Onglyza, according to the FDA (U.S. Food and Drug Administration).

Merck has also received marketing authorization for Marizev in Japan. Marizev is a once-weekly DPP-4 inhibitor. Merck is in the process of filing for omarigliptin, the generic of Marizev, in the United States. It was expected to complete the filing by the end of 2015.

Marizev currently has a two-week prescription limit. However, when the limit is removed, Marizev is expected to be a blockbuster drug in the DPP-4 class.

Contribution of Januvia and Janumet

Januvia and Janumet together contributed about 15.2% of Merck’s total revenues for 2015, an ~0.80% increase over 2014 in terms of contribution. These drugs are estimated to contribute ~16.0% of total revenues for 2016 and 16.3% of total revenues for 2017, reflecting a positive trend.

In order to divest risk, investors can consider ETFs such as the VanEck Vectors Pharmaceutical ETF (PPH), which holds ~5.1% of its total assets in Merck.

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