Why Merck & Co. makes serious bet on Keytruda

The US-based group Merck & Co. is largely focusing on its blockbuster Keytruda, an immunotherapy launched in Q4 2014 that has delivered approximately $5bn revenues since then, $3.8bn of which in 2017, that is as much as 9% of the whole group’s sales volume. According to Merck & Co.’s management, the drug will contribute as much as 22% to the total group’s revenues before 22%. Keytruda is marketed in the US at a $13,500 premium price for a 3-month treatment and is prescribed for various cancer types, such as lung, bladder and skin cancer. Moreover, Merck is heavily investing on Keytruda, indeed more than half of the budget set aside for clinical trials is aimed at funding it. Merck has as many as 700 ongoing clinical trials assessing Keytruda for over 30 cancer types, whereas its main competitor Bristol-Myers Squibb “only” has 641 assessing Opdivo. Merck’s strategy before Keytruda was marketing the highest possible number of drugs, so as to ensure a steady revenue growth. However, it has been reducing its effort on other products than Keytruda over the last 4 years. According to some analysts, this could prove very risky, indeed Merck’s shares have declined as much as 8.7% in 2017, while the pharma sector has lost only 1.7%. Merck’s decision of betting big on Keytruda is not fully shared by investors, whose skepticism increased as the company announced that the new therapy had not shown efficacy in some relevant clinical trials, such as the one conducted on patients with stomach cancer, whose results were announced last December.

(Source: WSJ)