Merck & Co., Inc. (MRK), Pfizer Inc. (PFE): Does This Pipeline Promise Tomorrow’s Blockbuster Sales?

Nearly every big pharma player has been hit with patent expirations that have hit hard on sales lately, and Merck & Co., Inc. (NYSE:MRK) is no exception. Merck & Co., Inc. (NYSE:MRK)’s one of the industry’s biggest giants, but the loss of patent protection on former top blockbuster drug Singulair and other leading medications has threatened this company’s future. While leading drugs such as Januvia are holding up Merck & Co., Inc. (NYSE:MRK)’s foundation, the company’s pipeline will make or break its long-term success.

Just how strong is Merck & Co., Inc. (NYSE:MRK)’s pipeline? Let’s take a look at this firm’s portfolio of developmental drugs and see what investors should think of Merck & Co., Inc. (NYSE:MRK)’s potential.

No shortage of drug candidates
Merck & Co., Inc. (NYSE:MRK)’s pipeline isn’t lacking for quantity. The company currently has six drugs and indications under review for regulatory approval, with 15 more therapies undergoing phase 3 trials as of May 6. Those 21 drugs in total match up well with some of the top pipelines in the business. As a comparison, Pfizer Inc. (NYSE:PFE), whose pipeline I’ve singled out for praise in the past, currently has six drugs undergoing regulatory review and 16 therapies in phase 3 trials as of May 9. Pfizer Inc. (NYSE:PFE)’s future looks strong with its robust pipeline that boasts 74 total drugs in development, and at least in late-stage candidates, Merck looks strong as well, with another 23 therapies in phase 2 development.

However, it’s the quality, not the quantity, of the pipeline that matters.

Insomnia aid suvorexant and osteoporosis drug odanacatib remain two of Merck’s most promising drugs in its late-stage pipeline. Suvorexant’s on track for approval soon, particularly after a Food and Drug Administration panel gave a thumbs-up to the drug’s safety and efficacy in May. Still, don’t get too carried away with this drug’s potential. Suvorexant might not even hit blockbuster potential, as average analyst estimates peg its peak sales at just $650 million by 2018. That won’t be enough to replace the more thanthe $1.6 billion Singulair alone lost in 2012.

Analysts give more weight to odanacatib’s potential, but this drug has hit hurdles of its own recently. Merck earlier delayed its expected filing for odanacatib’s approval until 2014, and while peak sales estimates are optimistic — analysts say the drug could hit up to $3 billion in peak sales — investors will have to be patient with this therapy.