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Merck & Co. Inc. Message Board

  • investora2z investora2z Mar 30, 2013 11:22 AM Flag

    Tough times in the near future

    MRK is on a long term uptrend since January 2009. The stock has been trading above the 50 day and the 200 DMA around $53. However, the recent results, and the fact that several of its patents have expired recently or are likely to expire soon, make it difficult for the stock to maintain this. The revenue and the net income for 2012 declined slightly. The EPS estimate for 2013 is in the range of $2.03 to $2.26. At the lower end of the range, this does not indicate much growth compared with the 2012 EPS of $2. Several of its major drugs have shown large declines in revenue. Singulair lost 30% (~$1.6 billion), Remicade and Cozaar / Hyzaar lost more than 20% (decline of $591 million and $379 million respectively). The loss was offset by increase in sales for Januvia, Janumet and Gardasi. Success of pharma companies depends on their ability to develop new drugs from time to time. Any slippage on that front may lead to serious drop in revenues. For MRK, there is a good product pipeline but usually estimates of the financial impact are not easy to make. It has several drugs under review and also several in trial stage for highly potential segments like alzheimer's, cancer, allergy etc. All fields are highly competitive with other companies trying new approaches to treating various diseases from time to time e.g companies are trying different methods for treatment of cancer including novel approaches taken by companies like Senesco Technologies (SNTI). With the postponement of filing application for approval of Odanacatib (an osteoarthritis drug) by few months, the immediate future looks difficult from the point of view of revenue growth. The long term story will obviously depend on the progress of the new drug development and also sales / marketing efforts to get more marketshare for existing drugs.

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