Januvia and Janumet: Merck & Co.’s Blockbuster Diabetes Products

Januvia and Janumet

Januvia and Janumet are two blockbuster drugs in Merck & Co.’s (MRK) Diabetes franchise. These drugs are used to lower blood sugar levels in patients with type 2 diabetes. The combined sales for these drugs totaled $1.51 billion for 4Q16, a 2% increase compared to $1.45 billion for 4Q15.

For fiscal 2016, the combined sales of these drugs totaled ~$6.1 billion, an ~1.5% growth over sales of ~$6.0 billion for 2015.

Januvia and Janumet: Merck & Co.’s Blockbuster Diabetes Products

What makes Januvia and Janumet special?

Januvia and its combination version, Janumet, are classified as DPP-4 inhibitors, referring to the enzyme Dipeptidyl Peptidase-4. This enzyme removes incretin from the human body for individuals without type-2 diabetes. However, people with type-2 diabetes require these DPP-4 inhibitors in order to prevent low blood sugar and weight gain.

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.

The competitors for Januvia and Janumet are Onglyza, jointly made by Bristol-Myers Squibb (BMY) and AstraZeneca (AZN), and Galvus from Novartis (NVS). Recently, the American Diabetes Association confirmed Januvia for a high safety profile and no risk of major adverse cardiovascular events or hospitalization for heart failure. The FDA issued a report expressing few concerns with respect to Onglyza’s safety profile.

Apart from Januvia, Merck & Co. has received marketing authorization for Marizev in Japan. Marizev is a once-weekly DPP-4 inhibitor. The company is focused on its existing portfolio of Januvia and Janumet, as well as its ongoing research including the late-stage products for diabetes. The company has no plans of submitting marketing applications for Marizev in the US or Europe.

Contribution of Januvia and Janumet

Januvia and Janumet together contributed about 14.9% of Merck & Co.’s total revenues for 4Q16, an ~0.7% increase compared to 4Q15. Further, these drugs are estimated to contribute over 15% for 4Q16.

To gain broad-based exposure to Merck & Co. stock, investors can consider the iShares Core High Dividend ETF (HDV), which holds ~3.5% of its total assets in MRK.