Revenue guidance for 2019
On its fourth-quarter earnings conference call, Merck & Co. (MRK) guided for revenue of $43.2 billion–$44.7 billion, a YoY (year-over-year) rise of 2%–6% despite anticipated challenges associated with drug pricing pressures, the impact of recent and upcoming patent expiries, and foreign currency fluctuations. Assuming mid-January rates, the company has guided for a negative revenue impact of 1% related to foreign exchange. The company expects its oncology, vaccines, animal health, and hospital and specialty businesses to be its key growth drivers in 2019.
In its fourth-quarter earnings press release, GlaxoSmithKline (GSK) reiterated its guidance of a low- to mid-single-digit compound annual growth rate in its revenue at a constant exchange rate from 2016 to 2020. While this forecast assumes exchange rates in 2015, it also assumes the generic erosion of Seretide/Advair. In 2018, US sales of Advair dropped 30% YoY (year-over-year) to 1.1 billion British pounds. On February 12, Mylan (MYL) issued a press release announcing the launch of Wixela Inhub, the first generic version of Advair, priced 70% lower than the branded drug.
Wall Street’s projections
Analysts expect Merck’s revenue to rise 4.92% YoY to $10.53 billion in the first quarter, 5.04% YoY to $44.43 billion in 2019, 5.25% YoY to $46.76 billion in 2020, and 5.43% YoY to $49.30 billion in 2021.
Analysts expect GlaxoSmithKline’s revenue, converted to dollars, to fall 3.76% YoY to $9.67 billion in the first quarter and then rise 0.36% YoY to $41.23 billion in 2019, 0.53% YoY to $41.45 billion in 2020, and 3.78% YoY to $43.01 billion in 2021.
Merck is not only expected to report higher absolute revenue but also a higher YoY revenue growth rate from 2019 to 2021.
Next, we’ll discuss EPS projections for Merck and GlaxoSmithKline in 2019.