With the addition of Schering-Plough last year, Merck's (NYSE: MRK) pipeline is perhaps as solid as it has been in years. As of its last update, the drugmaker had a whopping 19 compounds in phase 3 development, not including those being studied for additional indications.

Unfortunately, a pipeline only represents potential. The drugs still need to show positive results in order for that potential to turn into revenue. Here are four drugs that investors should keep their eye on.

Do you heart this risk-reward ratio?
Blood-clot reducer Vorapaxar is definitely in a high-reward situation. Bristol-Myers Squibb's (NYSE: BMY) and sanofi-aventis' (NYSE: SNY) Plavix rakes in a cool $6 billion- plus per year.

Unfortunately it's also a high-risk prospect. The problem with reducing clots is that if it's overdone, there tends to be increased bleeding. Striking the balance of reducing death from heart issues associated with blood clots and death from excessive bleeding is fairly difficult.

Even if the efficacy seems to outweigh any side effects, that's no guarantee that Vorapaxar will be a blockbuster. Eli Lilly's (NYSE: LLY) Effient has had a hard time unseating Plavix, and it's only going to get harder with generic versions of Plavix headed to the pharmacy in the not-too-distant future.

Waiting on a competitor
Merck's hepatitis C drug Boceprevir works great. The problem is that its competitor, Vertex Pharmaceuticals' (Nasdaq: VRTX) Telaprevir, seems to work better. I say "seems to" because neither company has run a head-to-head trial comparing the two. But comparing between trials, Telaprevir was able to cure a higher percentage of patients than Boceprevir.

Boceprevir's last chance at stardom will come when Vertex releases phase 3 data on patients who have already failed a previous treatment. Boceprevir was able to cure 66% of patients in its phase 3 trial in that population. If Vertex and marketing partner Johnson & Johnson (NYSE: JNJ) can top that number, you can write off Boceprevir. It'll still likely get approved, but won't be a major contributor to revenue.

A bone to stand on
Merck used to have a large piece of the osteoporosis market before Fosamax lost patent protection. Grabbing a piece of the market again with its phase 3 drug candidate, Odanacatib, would be a huge comeback.

How much it could grab remains to be seen. The market is crowded with generics, established drugs from Eli Lilly and others, as well as new drugs such as Amgen's (Nasdaq: AMGN) Prolia. The only way Odanacatib is going to make substantial inroads into the market is to show that it's better than competitors, which might be difficult with the current trials listed in ClinicalTrials.gov. The phase 3 trials are testing Odanacatib against placebo. That might be enough to get it on the market, but Merck will need to definitively show that the drug works better than current treatments to really succeed.

Same story keeping investors up at night
Like osteoporosis, insomnia is a large market that already has a lot of players, including generics of branded drugs like Sanofi's Ambien. Getting its insomnia drug MK-4305 approved could be the easy part for Merck.

In a recently completed phase 2b study, MK-4305 improved overall sleep efficiency over placebo quite well; the p-value that measures statistical significance was less than 0.005, meaning there was at least a 99.5% likelihood that the difference wasn't due to chance.

Too bad no one sells placebo. Merck would take all its market share for sure.

For the real competition, I have a hard time seeing the drug selling well until Merck tests MK-4305 against drugs already on the market. The three phase 3 trials listed in ClinicalTrials.gov are all testing MK-4305 against placebo, which should keep investors up at night.

One piece of the puzzle
When evaluating the future prospects of drugmakers, it's important to look at three aspects of the company: the growth of the current drugs, loss of sales due to drugs going off patent, and new drugs in the pipeline.

Merck has been struggling a bit with its revenue growth in part because of recent patent expirations. The pipeline might help turn things around, but investors should keep an eye on these drugs and consider bailing if they don't pan out.

Vertex Pharmaceuticals is a Motley Fool Rule Breakers recommendation. Johnson & Johnson is an Income Investor pick. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.