Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Can Merck Regain its Mojo in 2018 After an Unimpressive '17?

Shares of Merck MRK declined 4.4% in 2017 against the large cap pharma industry’s surge of 16.3%.

The industry’s rally was backed by strong quarterly results, new product sales ramp up with rising demand, successful innovation and product line expansion, strong clinical study results, more frequent FDA approvals and continued strong performance of legacy products. All these played a pivotal role in bringing the large-cap drug sector back on track last year. Pharma giants AstraZeneca AZN, Novo Nordisk NVO and Johnson & Johnson JNJ led from the front and outperformed the industry.

However, Merck missed out on the opportunity as it suffered some notable pipeline setbacks in 2017. In October, Merck decided not to seek approval for its CETP inhibitor anacetrapib for cholesterol management as its clinical profile was not strong enough to support regulatory filings.

In October, the company also announced a delay in the readout from an important lung cancer study to 2019. This was due to the inclusion of overall survival as a co-primary endpoint in the KEYNOTE-189 phase III study of Keytruda in first-line lung cancer. This raised investor concern, as the delay in the readout can give competitors a chance to gain strength in the lung cancer market.

In October, Merck also withdrew a regulatory application in Europe, which was looking to get Keytruda approved as first-line combination therapy for lung cancer.

In September, Merck discontinued the development of two of its HCV combination programs — MK-3682B and MK-3682C — saying that the HCV market is becoming extremely crowded. Also, three combination studies of Keytruda for multiple myeloma were placed on clinical hold, following reports of death in Keytruda groups in July. Keytruda is seen as a key long-term growth driver at Merck and such setbacks do not bode well for the company.

It remains to be seen if the strong performance of its new drugs, particularly Keytruda, its strong vaccines and animal health business and cost saving efforts can help Merck pick up in 2018.

Keytruda, the second-largest product in the Merck portfolio, is gaining strong momentum from new indication of first-line lung cancer. In fact, Keytruda is continuously growing and expanding into new indications and markets globally. The Keytruda development program also significantly advanced in 2017 with several key regulatory approvals which should further drive sales in 2018.

Merck’s global restructuring program aims at reducing the cost structure and increasing efficiency. It intends to reduce the number of manufacturing sites, including animal health sites, and consolidate other facilities. The company expects annual savings of about $4.0−$4.6 billion once the restructuring program is completed.

Merck carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Investor Alert: Breakthroughs Pending

A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.

Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.

Click here to see them >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Astrazeneca PLC (AZN): Free Stock Analysis Report
 
Novo Nordisk A/S (NVO): Free Stock Analysis Report
 
Johnson & Johnson (JNJ): Free Stock Analysis Report
 
Merck & Company, Inc. (MRK): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research