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Performance of Merck’s Animal Health Segment in 1Q17

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Animal Health segment

Merck & Co. (MRK) has operations for its Animal Health segment in more than 140 countries. The segment includes drugs and vaccines for the prevention, treatment, and controlling of diseases in animals. Global sales for the segment in 1Q17 were $939.0 million, a 13.0% growth compared to $829.0 million in 1Q16.

The above graph shows revenues for the Animal Health segment for the past nine quarters. In terms of percentage of total revenues, the segment’s contribution rose to 10.0% of total revenues in 1Q17.

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Revenue drivers for Animal Health

In March 2017, Merck acquired a controlling stake in Vallée, a private company in Brazil, to strengthen its Animal Health portfolio.

Revenues for the Animal Health segment include revenues from sales of drugs as well as vaccines for both farm animals and companion animals. The revenues are substantially impacted by competition from generic products.

Revenue growth for 1Q17 was driven by companion animal products, including Bravecto, a chewable tablet that kills fleas and ticks in dogs for up to 12 weeks. It has shown strong growth in revenues over the last few quarters, driven by increased demand. Bravecto competes with Nexgard, Sanofi’s (SNY) subsidiary Merial’s drug.

Ruminant, poultry, and swine products reported growth in revenues in 1Q17. The swine products portfolio include drugs such as Circumvent PCV, Porcilis PRRS, Regumate, Respig, and Zuprevo.

To divest the risk, you can consider the iShares S&P Global Healthcare (IXJ), which holds 4.4% of its total assets in Merck. IXJ also holds 4.9% of its total assets in Pfizer (PFE) and 4.9% in Novartis (NVS).

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