Merck to focus on Keytruda, separating out biosimilar business

By Ben Hargreaves

- Last updated on GMT

(Image: Getty/Stillfx)
(Image: Getty/Stillfx)

Related tags Keytruda Merck

The newly separate business will include women’s health, legacy brands, and biosimilar units, as the main part of the business retains oncology, vaccines, hospital and animal health.

Keytruda (pembrolizumab) represented sales of $3.1bn (€2.84bn) in Merck’s fourth quarter results, consisting of a significant chunk (26%) of the company’s overall fourth quarter sales of $11.8bn (€10.8bn).

The product is the key part of the company’s oncology portfolio, which will be one of four core focuses of the adjusted Merck business, known as MSD outside of North America and Mexico.

The as yet unnamed separated part of the business will hold women’s health, legacy brands, and biosimilar divisions, with the transaction expected to complete in the first half of 2021.

CEO Ken Frazier outlined that such a business move had been eyed for ‘a few years’ and acknowledged that Keytruda would ‘drive more growth’ for the company into the future.

“The most important thing that I would say about Keytruda is that right now we continue to see the benefits of our focus both in terms of R&D and commercial execution going forward,” ​Frazier commented on a call with investors regarding financial results.

Kevin Ali will become CEO of the newly formed company, and he pointed to revenues from biosimilars as a ‘rapidly expanding’ part of the business. He noted that revenues from its three approved products reached $250m over the course of 2019.

With Keytruda already representing a core part of the company’s portfolio, the slimmed down Merck will have further dependence on this product for its performance.

Whether this was an issue was raised during the investor call. Frank Clyburn, CCO of Merck, replied by highlighting its broader portfolio: “It’s not just about Keytruda, it's Lynparza (olaparib), it's Lenvima (lenvatinib), it's our pipeline in oncology that we've discussed. We also feel very good about our vaccine performance this year.”

For perspective, Lynparza raised $132m and Lenvima $124m in the fourth quarter.

Regarding vaccines, the company’s Gardasil/Gardasil 9 (recombinant human papillomavirus vaccine) performed strongly in full year results, with sales of $3.7bn – though Merck is currently struggling to meet demand​ for the product.

The new company is expected to achieve 2020 revenue of $6.5bn, with low single-digit revenue growth.

As a result of the two businesses standing alone, the company stated that it expects to achieve operating efficiencies in excess of $1.5bn by 2024.

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