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Remicade Is Driving Down Merck’s Immunology Franchise

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Aug. 16 2016, Updated 11:04 a.m. ET

Remicade  

Remicade is one of the blockbuster drugs for Merck and 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 has reported a constant decline in Remicade revenues. Apart from Merck, Johnson and Johnson (JNJ) also has marketing rights of Remicade for certain countries outside Europe.

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Remicade revenues  

Remicade revenues declined by ~26% to $339 million in 2Q16, as compared to $455 million for 2Q15. This was mainly due to the entry of generic competitors and biosimilars following the loss of exclusivity in European markets. Merck expects Remicade revenues to further decline, as new patients prefer biosimilars over Remicade.

Other drugs in immunology franchise  

Apart from Remicade, Simponi is a drug from the inflammatory franchise. Simponi revenues increased to $199 million for 2Q16 as compared to $169 million for 2Q15.

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Blockbusters are losing revenues

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

The combined revenues for these drugs increased by 4% at $994 million in 2Q16 as compared to $955 million for 2Q15. For the US markets, the sales for Zetia grew in 2Q16 while the sales for Vytorin declined. Worldwide sales were affected due to the loss of exclusivity of Vytorin in the US and Zetia in Canada.

The company received a complete response letter from the US Food and Drug Administration (or FDA) for its supplemental new drug applications for Zetia and Vytorin on February 15, 2016. The competitors for Zetia include Niaspan from AbbVie (ABBV) and Lipitor from Pfizer (PFE). Investors can consider ETFs like the iShares Global Healthcare ETF (IXJ), which holds ~3.8% of its total assets in Merck.

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