Merck & Co.’s 3Q15 Earnings Show a Positive Future

(Continued from Prior Part)

Januvia and Janumet

Januvia and Janumet are two blockbuster drugs in Merck & Co.’s (MRK) diabetes franchise. The drugs are used to lower the blood sugar level in patients with type-2 diabetes. The combined sales for these drugs was ~$1.6 billion for 3Q15. This was an ~17% rise in constant currencies compared to the previous year.

What makes Januvia and Janumet special?

Januvia and Janumet, its combination version, are drugs classified as a “DPP-4 inhibitor.” “DPP-4″ is the enzyme Dipeptidyl Peptidase-4. This enzyme removes incretin from the human body for people without type-2 diabetes. However, people with type-2 diabetes require these DPP-4 inhibitors to prevent low blood sugar and weight gain.

Januvia has a very high share in Japan because DPP-4 inhibitors have more patient days of therapy than other treatments. Japan has always been a very fast uptake market for DPP-4 usage.

The competitors for Januvia and Janumet are Onglyza—jointly made by Bristol-Myers Squibb (BMY) and AstraZeneca (AZN)—and Galvus from Novartis (NVS). Recently, Januvia was confirmed for a high safety profile. It has no risk of major adverse cardiovascular events or hospitalization for heart failure by the American Diabetes Association. There were a few concerns with the safety profile for Onglyza, according to the FDA’s (US Foods and Drug Administration) report.

Apart from Januvia, Merck received marketing authorization for Marizev in Japan. Marizev is a once-weekly DPP-4 inhibitor. Merck is in the process of filing Omarigliptin—the generic name of Marizev in the US. It expects to complete the filing by the end of 2015.

Currently, Marizev has a limit of a two-week prescription. However, this limit will be removed. Marizev is expected to be a blockbuster drug in the DPP-4 class.

Contribution of Januvia and Janumet

Together, Januvia and Janumet contributed about 15.6% of the total revenue for 3Q15—an ~1.8% rise compared to 3Q14 in terms of the contribution. These drugs are estimated to contribute ~16.6% of the total revenue for 4Q15. This shows a positive trend.

Investors can consider ETFs like the Market Vectors Pharmaceutical ETF (PPH) or the Vanguard Healthcare ETF (VHT) to divest the risk.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Merck & Co. Is Growing despite Its Revenue Falling in 3Q15

• Part 2 - Changes in Merck & Co.’s Reported Business Segments in 2015

• Part 4 - Gardasil Is Driving Merck’s Vaccine Business