Merck Shares Drop After R&D and Business Briefing Fail to Impress

Melly Alazraki
Updated
Shares of Merck, whose Lansdale, Penna., campus is pictured here, fell 2.2% Tuesday after the company failed to wow investors during its R&D and Business Briefing -- the first one following the integration of Schering-Plough, which Merck acquired last year for $49.6 billion.
Shares of Merck, whose Lansdale, Penna., campus is pictured here, fell 2.2% Tuesday after the company failed to wow investors during its R&D and Business Briefing -- the first one following the integration of Schering-Plough, which Merck acquired last year for $49.6 billion.

Shares of Merck (MRK) fell 2.2% Tuesday after the company failed to wow investors during its R&D and Business Briefing -- the first one following the integration of Schering-Plough, which Merck acquired last year for $49.6 billion.

Merck is already dealing with generic competition for its blood-pressure drugs Cozaar and Hyzaar and is bracing for the loss of patent protection on its asthma treatment Singulair in 2012.

In the last quarter, Singulair sales grew 10% from a year earlier to over $1.1 billion. For all of 2009, Singulair sales amounted $4.66 billion.

Robust Late-Stage Pipeline

Merck sounded the most optimistic in its press release, touting its robust late-stage pipeline, global business strategy and progress of integration. The more than 20 candidates in its late-stage drug pipeline include therapies for atherosclerosis, thrombosis, hepatitis C, insomnia, migraines, osteoporosis and Parkinson's.

Four new drugs are currently under regulatory review in the U.S. and Europe, and in this year, Merck says it will seek U.S. regulatory approval for five new medicines, including new treatments for hepatitis C and diabetes, and five more filings for new indications or new formulations.

The company outlined several treatments it plans to file for approval in 2011 and 2012, including the one analysts hope would be a big seller, vorapaxar anticlotting treatment. Between vorapaxar and betrixaban for atrial fibrillation, Merck seems to be betting on heart drugs, according to Forbes, and is running human studies containing more than 90,000 patients in this area.

Taking Advantage of Health-Care Reform

Merck also said it's well-positioned to take advantage of the health-care reform legislation regarding biosimilars -- generic equivalents of branded biotech drugs -- and will have five biosimilar programs in Phase III development by 2012. At the same time, Merck also announced it discontinued development of MK-2578, which was to be a version of Amgen's (AMGN) blockbuster Aranesp drug to treat chemotherapy-induced anemia. Merck was hoping to begin selling it in 2012 and investors, it seems, were most disappointed by this announcement.

The company highlighted its strategy of expanding into emerging markets to help find new sources of revenue and shifting resources there from developed markets, Bloomberg reported. Merck expects to get 25% of its pharmaceutical and vaccine sales from developing countries by 2013.

Finally, Merck reiterated the financial targets it provided when it reported first-quarter results last week. These already didn't impress analysts, who expected more.

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