Finance

Expert Insights: Merck is One to Watch in 2018

Finance

09:03, February 8 2018

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Lisa Marris, GlobalData Common Content Databases Analyst, explains how Merck is likely to have a strong financial year in 2018

The pharmaceutical industry is highly volatile, with promising lead candidates making or breaking a company’s year. A company’s financial success is often down to the strategic deals they are able to make with other pharmaceutical companies and research organizations to enable them to develop the next leading drug in the market. Here’s a look at the deals and the companies that led the way in 2017.

Figure 1 shows the companies that completed the highest valued licensing and partnership deals for 2017, as well as their percentage change compared to 2016. The $8.5 billion agreement between AstraZeneca and Merck to co-develop AstraZeneca’s LYNPARZA (olaparib) for multiple cancer types puts the two companies at the top for strategic alliance spending for 2017. AstraZeneca just clinched the top spot from Merck with its development deals with Pieris Pharmaceuticals and MedImmune. However, Merck has had an arguably more successful year. It more than quadrupled its alliance deal values since 2016, and if its subsidiaries are added to the equation, its 2017 deal values rise to $9.5 billion, an increase of 248 percent from 2016, whereas AstraZeneca and its subsidiaries stayed almost stagnant at $11 billion.

Pieris Pharmaceuticals also saw a good year, making alliances in 2017 worth more than 35 times those it made in 2016. However, it is unlikely to do as well this year, as the 2017 value was primarily due to its $2.2 billion co-development deal with AstraZeneca, alongside a $1.8 billion licensing agreement with Les Laboratoires Servier. The development agreement with AstraZeneca will help Pieris enhance its inhaled drug candidates for respiratory diseases, whereas the collaboration with Servier will advance Pieris’ immune-oncology programs, led primarily by PRS-332, a PD-1-targeting bispecific checkpoint inhibitor.

Allergan and Novartis both experienced slower years than 2016, with decreases in partnership and licensing deal value by 44 percent and 5 percent, respectively. However, both companies still closed big deals in 2017. Allergan entered into a $2.8 billion licensing agreement with Assembly Bioscience to acquire microbiome gastrointestinal (GI) development programs. Novartis entered into almost double the number of deals it had in 2016, and closed two $1 billion deals in cardiovascular and eye indications with Ionis Pharma and Tribos, respectively.

Only time will tell what 2018 will bring, but it is likely to be Merck’s year in terms of research and development collaboration.

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