In its third-quarter earnings conference presentation, Merck & Co. (MRK) said that it expects its operating expenses to rise YoY (year-over-year) in the low to mid-single digits in 2018, mainly driven by increased R&D (research and development) expenses. The company also expects its GAAP (generally accepted accounting principles) effective tax rate to be in the range of 26.0%–27.0%.
According to its third-quarter earnings conference call, AbbVie (ABBV) has projected an increase in investments to support the launch of new products such as Orilissa, Venclexta, upadacitinib, and risankizumab.
Wall Street analysts expect Merck & Co.’s SG&A (selling, general, and administrative) expenses as a percentage of its revenues to be 23.94%, 23.46%, and 22.50%, respectively, in 2018, 2019, and 2020. On the other hand, AbbVie is expected to report SG&A expenses as a percentage of revenues of 20.49%, 20.39%, and 19.52%, respectively, in 2018, 2019, and 2020. While both companies are expected to reduce their SG&A spending-to-revenue ratios from 2018 to 2020, AbbVie is expected to spend a lower percentage of its revenues on sales activities compared to Merck & Co.
Wall Street analysts expect Merck & Co.’s R&D expenses as a percentage of its revenues to be 18.88%, 18.40%, and 18.02%, respectively, in 2018, 2019, and 2020. On the other hand, AbbVie is expected to report R&D expenses as a percentage of revenues of 15.75%, 15.76%, and 15.38%, respectively, in 2018, 2019, and 2020. AbbVie is expected to dedicate a lower percentage of its revenues to R&D activities than Merck & Co. from 2018 to 2020.
In the next article, we’ll compare the shareholder value generated by Merck & Co. and AbbVie in greater detail.