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Why Is Remicade Driving Down Merck’s Immunology Franchise?

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Remicade

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

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Remicade revenues

Remicade revenues declined by ~24% to $1.8 billion in 2015 compared to $2.4 billion in 2014. This was mainly due to the entry of generic competitors and biosimilars following the loss of exclusivity in European markets.

In terms of market share, the Remicade share declined to ~95% during the second quarter of 2015, to ~90% during the third quarter of 2015, and to ~85% during the fourth quarter of 2015 in European markets. Merck expects Remicade revenues to further decline in the future, as new patients prefer biosimilars over Remicade and the number of new patients will grow day-by-day.

Other drugs in Immunology franchise

Simponi is a drug from Merck’s Immunology franchise. Simponi reported no change in its revenues at $690 million during 2015 compared to 2014 revenues.

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Zetia and Vytorin: Blockbusters that are losing revenues

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

The combined revenues for these drugs declined by 9% at $3.8 billion in 2015. For US markets, sales for Zetia increased in 2015, while sales for Vytorin declined. Worldwide sales were affected due to loss of exclusivity of Vytorin in the United States and Zetia in Canada.

Merck & Co. received a complete response letter from the FDA (U.S. Food and Drug Administration) for its supplemental New Drug Application for Zetia and Vytorin on February 15, 2016. Competitors for Zetia include Niaspan from AbbVie (ABBV) and Lipitor from Pfizer (PFE). 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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