Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Merck & Co., Inc. (MRK): This Pharmaceutical Company Is Poised for Wellness

Meanwhile, Lambrolizumab, Merck’s cancer drug, has received ‘breakthrough’ therapy status from the FDA for the treatment of advanced melanoma. Advanced melanoma accounts for more than 80% of skin cancer-related deaths and 1%-2% of all cancer deaths in the U.S. alone. The breakthrough status will allow the company to expedite the development of this drug.

Another important drug in Merck & Co., Inc. (NYSE:MRK)’s pipeline is Vintafolide, which is a therapy for ovarian cancer and is already under review by European regulators. Its cholesterol drug Vytorin, was recently deemed safe enough to continue a trial.


Let us compare Merck’s prospects with that of its peers, Pfizer Inc. (NYSE:PFE) and Novartis AG (ADR) (NYSE:NVS).

Last year, Novartis AG (ADR) (NYSE:NVS) toppled Pfizer Inc. (NYSE:PFE) from its position as the leading global drug marker and is currently best placed among the three. Analysts predict 1.3% revenue growth to $57.4 billion this year. There is also a lot of excitement over its announcement that it has met all objectives in a clinical study for a psoriasis treatment.

Meanwhile, Pfizer is the hardest hit with patents expiring for some of its best selling drugs. The cholesterol fighting drug, Lipitor, which once generated $13.5 billion in annual sales, brought in only $626 million in the first quarter. The patent for this drug expired in 2011. And in June, the UK patent expired for another bestseller, Viagra. Analysts’ expect Pfizer Inc. (NYSE:PFE)’s total sales to fall by 11.9% to $52 billion this year.

Analysts’ expect Merck & Co., Inc. (NYSE:MRK) to report a modest 4% revenue slippage this year to $45 billion and get to around $45.5 billion level in 2014. This compares with the $47 billion sales that the company saw in 2012.

While, Novartis AG (ADR) (NYSE:NVS) is the best placed among the three it is also the most expensive with a forward price-to-earnings ratio of 13.17. Pfizer Inc. (NYSE:PFE) is the cheapest with forward price-to-earnings ratio of 12.12, but is facing too many uncertainties.

Merck, with its forward price-to-earnings ratio of 12.73 is a good alternative and can see reasonable upsides over the coming months. Moreover, the additional $15 billion share repurchases that the board approved and the solid 3.6% dividend yield are good extra incentives for owning the stock.

Last word

No doubt, Merck & Co., Inc. (NYSE:MRK) is facing challenges, but it still has good prospects in the form of increasing presence in emerging markets and a strong pipeline. A pickup in the sales of Januvia and Janumet drugs in the U.S. can help it meet analyst estimates. Given its valuation and considering the upsides that are possible, investors can definitely remain upbeat about the stock.

The article This Pharmaceutical Company Is Poised for Wellness originally appeared on

Eshna De has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Eshna is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.