Merck & Co., Inc. (MRK): One Potential Roadblock For A Stock Runup

Page 1 of 2

Merck & Co., Inc.If you own Merck & Co., Inc. (NYSE:MRK) stock, you likely enjoyed the past couple of months. Shares were on a downward trajectory in late 2012 and into early 2013, but the past couple of months are looking much better.

Merck & Co., Inc. (MRK): One Potential Roadblock For A Stock Runup

MRK data by YCharts.

Since February, Merck stock has jumped nearly 14%. Will this nice stock run continue — or is a roadblock right around the corner?

Potential obstacles
It won’t be hard to identify potential obstacles. One that especially stands out is declining revenue from several high-dollar drugs.

Singulair stands at the top of this list. Merck & Co., Inc. (NYSE:MRK) lost U.S. patent protection for the asthma drug in August. Sales for Singulair fell by 67% in the fourth quarter. Merck lost European patent protection for the drug in February, so these numbers will undoubtedly worsen.

Migraine drug Maxalt went off patent in the U.S. in December and loses European market exclusivity in August of this year. Male pattern hair loss drug Propecia also faces generic rivals in 2013. These two drugs combined for more than $1 billion in 2012 sales.

Merck & Co., Inc. (NYSE:MRK) also continues to see lower sales from Remicade and Simponi, which brought in a combined $2.4 billion in 2012. The company reached an agreement with Johnson & Johnson (NYSE:JNJ) in 2011 to relinquish rights to market the anti-inflammatory drugs in several regions. Under the deal, J&J gained distribution for Remicade and Simponi in Canada, Latin America, the Middle East, Africa, and Asia Pacific. These territories represent about 30% of Merck’s 2010 revenue for the drugs.

The good news for Merck & Co., Inc. (NYSE:MRK) is that diabetes drugs Januvia and Janumet continue to show strong growth. Potential rivals really haven’t mounted a significant threat so far. Eli Lilly & Co. (NYSE:LLY)‘s diabetes drug Tradjenta was approved in 2011 with some thinking that it could rapidly gain market share However, the launch for the drug got off to a relatively sluggish start. Boehringer Ingelheim, Lilly’s partner for Tradjenta, cited an “economic headwind” in Europe and the U.S. that affected sales in 2012.

Most likely to succeed?
While there are several potential roadblocks for sustained stock success, probably the most likely to make a difference in the coming months is a failure in Merck’s pipeline. Another experience like Merck & Co., Inc. (NYSE:MRK) had with Tredaptive could easily stop the stock’s upward trajectory.

In January, the company pulled the plug on the cholesterol drug after Tredaptive failed to reduce heart problems and safety concerns arose in a large-scale clinical study. While the drug was not yet approved in the U.S., it had received approval in around 70 other countries. Merck subsequently pulled Tredaptive from those markets.

It seems unlikely that history would repeat itself with another drug in Merck’s pipeline so soon after this failure, but anything is possible. The company has three drugs under review by the Food and Drug Administration and one under review by European regulators. Any negative news could send Merck & Co., Inc. (NYSE:MRK) stock downward.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!