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)’s Weakest Blockbuster?

Merck & Co., Inc. (NYSE:MRK)‘s rheumatoid arthritis blockbuster Remicade provides a tricky entry in this series about the company’s main products, now that Singulair is off-patent. Remicade had net sales of $2.1 billion last year, which seems minuscule compared with the more than $9 billion AbbVie Inc (NYSE:ABBV) scored with Humira. But Merck shares Remicade with Johnson & Johnson (NYSE:JNJ), which has the better side of the financial deal.

Here’s a deeper look at this best-selling drug.

Remicade lowdown
Remicade accounted for 5% of Merck’s pharmaceutical segment last year, which puts it above HPV vaccine Gardasil and the fast-growing diabetes combination drug Janumet.

Merck & Co., Inc. (NYSE:MRK)Rheumatoid arthritis, or RA , is a chronic inflammatory joint condition that’s often treated with the generic drug methotrexate. For patients needing further options, there’s combination therapy pairing methotrexate with a class of biologics called tumor necrosis factor, or TNF, inhibitors. Remicade and Humira both belong to that class.

Humira dominates the market because it’s well tolerated and effective. Patients can administer Humira at home with a pen-style injector. Remicade has the disadvantage of requiring intravenous administration at a doctor’s office or hospital. But Remicade still holds on near the top of the TNF heap.

Remicade had net sales of $2.1 billion last year for Merck, down 22% from the previous year. The fall was partly due to the renegotiated terms with Johnson & Johnson, which went into effect during the summer of 2011. Johnson’s 2012 Remicade revenues were $6.1 billion.

The new deal
Johnson and Merck fought a legal battle over Remicade and another arthritis drug, called Simponi. Johnson alleged that the original deals weren’t valid since Johnson struck them with Schering-Plough, which Merck acquired. The feud ended with a revised agreement.

Merck retained rights in overseas areas that had accounted for 70% of the company’s prior-year Remicade revenues. But the profit arrangement changed to an even split, down from Merck’s previous 58%. Merck had to give Johnson a $500 million one-time payment and the rights to a handful of territories that includes Canada, most of the Middle East, and Central and South America. Johnson kept U.S. rights.

The fact that Remicade’s still a blockbuster drug for Merck underscores the size of the RA market. But could Merck see further losses in the near future?

New class
I previously detailed the recent entry of Pfizer Inc. (NYSE:PFE)‘s Xeljanz — a first-in-class JAK inhibitor that may collect patients because it offers oral dosage. Humira doesn’t need to fear Xeljanz. Doctors have more than a decade of experience with AbbVie’s drug, and the self-injection is the most convenience an injectable can offer.

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.