Year Established: 1889
Revenues: $39,498 (-6%)
Pharma Revenues: $34,782 (-3%)
Net Income: $4,442 (-63%)
R&D: $6,704 (-7%)
TOP SELLING DRUGS
|Proquad, MMR, and Varivax||vaccines||$1,505||8%|
Due to the ongoing impacts of the loss of market exclusivity for several products, worldwide sales for Merck dropped 6% to $39.5 billion in 2015. However, the company reported that these unfavorable impacts were partially offset by volume growth in oncology, diabetes, women’s health and vaccine products.
Sales in the U.S. were $17.5 billion, an increase of 3%, driven primarily by the acquisition of Cubist Pharmaceuticals, as well as higher sales of the company’s lung cancer treatment Keytruda, Gardasil/Gardasil 9, Januvia/Janumet, Zetia, a cholesterol modifying medicine, and higher third-party manufacturing sales.
International sales declined 13% to $22 billion in 2015 due mostly to unfavorable foreign exchange across all regions. Lower sales in the pharmaceutical segment reflected declines in Europe and Japan, partially offset by growth in the emerging markets. Sales in Europe declined 19% to $7.7 billion because of bad foreign exchange and lower sales of Remicade, as well as lower sales of products for the treatment of HCV and from product divestitures and ongoing generic erosion. Sales in Japan declined 23% to $2.6 billion. Again aside from foreign exchange, the sales decline was largely driven by product divestitures and the ongoing impacts of the loss of market exclusivity for several products, including Cozaar and Hyzaar, treatments for hypertension, as well as lower sales of PegIntron and Januvia.
Emerging market revenue also dropped but not as sharply as Europe and Japan. Sales were $7.3 billion, a decline of 6%. Total international sales for Merck represented 56% of total sales in 2015.
On the M&A front
At the tail end of 2014 Merck struck a major deal when it acquired Cubist Pharmaceuticals for $9.5 billion. Cubist develops therapies to treat infections caused by a broad range of increasingly drug-resistant bacteria. Its antibiotic Cubicin is the only approved once-a-day therapy for both S. aureus bacteremia and complicated skin and skin structure infections (cSSSI). In addition, Cubist has a late-stage pipeline of anti-infective medicines, including Zerbaxa, which at the time of the deal was pending FDA approval. Merck said the deal added more than $1 billion of revenue to its 2015 base.
In another transaction, Merck acquired cCAM Biotherapeutics, a privately held biopharmaceutical company focused on the discovery and development of novel cancer immunotherapies. Merck made an upfront payment of $95 million, with an additional $510 million to be paid when certain clinical development, regulatory and commercial milestones are met.
The acquisition provides Merck with several early immunotherapy candidates including cCAM Biotherapeutics’ lead pipeline candidate, CM-24—a novel monoclonal antibody (mAb) targeting the immune checkpoint protein CEACAM1 that is currently being evaluated in a Phase I study for the treatment of advanced or recurrent malignancies, including melanoma, non-small-cell lung, bladder, gastric, colorectal, and ovarian cancers. Based on the transaction, cCAM Biotherapeutics, headquartered in Israel, will become a wholly owned subsidiary of Merck and continue to advance the development of CM-24 in its ongoing Phase I clinical trial. cCam was originally established under the Israeli Office of Chief Scientist’s incubators program.
At the very beginning of 2016 Merck acquired IOmet Pharma, a drug discovery company focused on the development of medicines for the treatment of cancer, with a particular emphasis on the fields of cancer immunotherapy and cancer metabolism.
During the year Merck entered into a multi-year collaboration with NGM Biopharmaceuticals to research, discover, develop and commercialize novel biologic therapies across a wide range of therapeutic areas. The collaboration includes multiple drug candidates currently in preclinical development at NGM, including NP201 being evaluated for the treatment of diabetes, obesity and nonalcoholic steatohepatitis (NASH). NGM will lead R&D for existing preclinical candidates and pursue other discovery stage programs. Merck will have the option to license any resulting NGM programs following human proof of concept trials for global product development and commercialization.
NGM received $94 million upfront and Merck purchased a 15% equity stake in NGM for $106 million. Merck said it will commit as much as $250 million to fund NGM’s efforts under the initial five-year term of the collaboration, with the potential for additional funding.
Prior to Merck initiating a Phase III study for a licensed program, NGM may elect to receive milestone and royalty payments or to participate in a global cost and revenue share arrangement of as much as 50%. NGM also has the option to participate in the co-promotion of any co-funded program in the U.S. NGM’s lead program, NGM282, currently in clinical development for primary biliary cirrhosis (PBC) and NASH, are not subject to the option under the Merck collaboration.
Advancing the pipeline
During 2015, Merck continued to execute its research and development focused-strategy, advancing its pipeline and commercial portfolio.
Merck is focusing its research efforts on the therapeutic areas that it believes can make the most impact on addressing critical areas of unmet medical need, such as cancer, hepatitis C, cardiometabolic disease, resistant microbial infection and Alzheimer’s disease.
During 2015, the company continued to make strides in its late-stage pipeline. MK-6072, bezlotoxumab, is an investigational antitoxin for the prevention of Clostridium difficile (C. difficile) infection recurrence that is currently under review with the FDA and the European Medicines Agency (EMA). MK-1293, an insulin glargine candidate for the treatment of patients with type 1 and type 2 diabetes being developed in a collaboration, is also under review in the EU, as is Zepatier. Keytruda is under review in the EU for the treatment of NSCLC.
In addition to Phase III programs for Keytruda in the therapeutic areas of bladder, breast, colorectal, gastric, head and neck, multiple myeloma, and esophageal cancers, the Company also has more than 10 candidates in Phase III clinical development in its core therapeutic areas, as well as other areas with significant potential, including MK-3102, omarigliptin, an investigational once-weekly dipeptidyl peptidase-4 (DPP-4) inhibitor in development for the treatment of adults with type 2 diabetes; MK-0822, odanacatib, an oral, once-weekly investigational treatment for patients with osteoporosis; MK-8835, ertugliflozin, an investigational oral sodium glucose cotransporter-2 (SGLT2) inhibitor being evaluated alone and in combination with Januvia (sitagliptin) and metformin for the treatment of type 2 diabetes; and MK-8237, an investigational allergy immunotherapy tablet for house dust mite allergy. Merck expects to submit applications for regulatory approval in the United States for each of these candidates, as well as MK-1293 described above, in 2016.
As a result of continued portfolio prioritization, the company is out-licensing or discontinuing selected late-stage clinical development assets. During 2015, the company out-licensed MK-1602 and MK-8031, investigational small molecule oral calcitonin gene-related peptide (CGRP) receptor antagonists, which are being developed for the treatment and prevention of migraine.
Keytruda leads the way
In terms of product approvals, Merck received several in 2015 that include expanded indications for Keytruda, which was initially approved by the FDA in September 2014 for the treatment of advanced melanoma in patients with disease progression after other therapies. Merck announced during the year that the lung cancer treatment is launching in more than 40 markets, including in the EU.
In 2015, Merck achieved multiple additional regulatory milestones for Keytruda including accelerated approval from the FDA for the treatment of patients with metastatic NSCLC whose tumors express PD-L1 as determined by an FDA-approved test, and who have disease progression on or after platinum-containing chemotherapy. In addition, the FDA approved an expanded indication for Keytruda to include the first-line treatment of patients with unresectable or metastatic melanoma.
Additionally, in 2015, the European Commission approved Keytruda for the treatment of advanced (unresectable or metastatic) melanoma in adults. The Keytruda clinical trials program currently includes more than 30 tumor types in more than 200 clinical trials, including over 100 trials that combine Keytruda with other cancer treatments.
The company is also launching Zepatier and Bridion in the United States, as well as U.S. FDA approval for Bridion (sugammadex) Injection, a medication for the reversal of two types of neuromuscular blocking agents used during surgery. CP
Merck’s strategically focused initiative looks to meet unmet needs in the hospital setting
When Merck announced that it was buying Cubist Pharmaceuticals for $9.5 billion, it signaled that the acute care market within the larger hospital setting was becoming a top priority for the pharma giant. Hospitals are a central hub for healthcare delivery around the world and currently represent 25 percent of overall healthcare spend. At the time of the deal Merck said it was an optimal time to significantly grow its hospital acute care presence because of the positive regulatory and reimbursement trends in the hospital setting and the increasingly important role that hospitals are expected to provide in healthcare overall.
For more than 20 years, Cubist has been a global leader in antibiotics and has built a strong portfolio of both marketed and late-stage pipeline medicines to treat serious and potentially life-threatening infections caused by a broad range of increasingly drug-resistant bacteria. Cubist’s antibiotic Cubicin is the only approved once-a-day therapy for both S. aureus bacteremia and complicated skin and skin structure infections (cSSSI). It has been used to treat more than two million patients and continues to be an important therapy in the acute care environment. Cubist’s in-line and late-stage pipeline of anti-infective medicines, including Zerbaxa, which is pending approval from the U.S. FDA, will enhance Merck’s hospital acute care business in a variety of therapeutic areas, including Gram-positive and Gram-negative multi-drug resistant infections.
Merck said Cubist complements its strategy and the global initiative it launched last year, particularly in the area of its commercial focus on key therapeutic areas that have the potential to deliver the greatest return on investment. With the company’s investment in anti-infectives as well as its customer-focused operating model, Merck identified the hospital acute care segment as one of the company’s key priority areas to address significant unmet medical needs.