With the addition of Schering-Plough last year, Merck's
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
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
Waiting on a competitor
Merck's hepatitis C drug Boceprevir works great. The problem is that its competitor, Vertex Pharmaceuticals'
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
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
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.
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