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Must-Read Notes on Merck & Co.’s 4Q17 and 2017 Earnings

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Must-Read Notes on Merck & Co.’s 4Q17 and 2017 Earnings PART 1 OF 10

Merck & Co.’s Revenues in 4Q17

Merck’s 4Q17 performance

Headquartered in New Jersey, Merck & Co.’s (MRK) portfolio comprises its Human Pharmaceutical Products and Animal Health Products segments. Merck & Co. reported revenue growth of 3.0% to ~$10.4 billion in 4Q17 compared to $10.1 billion in revenues in 4Q16. 

Merck reported earnings per share (or EPS) of $0.98 in 4Q17. The chart below shows the company’s revenue trend since 1Q16.

Merck &amp; Co.’s Revenues in 4Q17

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Revenues for 4Q17

Merck’s (MRK) revenues reported growth of 2.0% at constant exchange rates in 4Q17. This growth was driven by strong sales of Keytruda, Zepatier, Bridion, Simponi, the Gardasil franchise, Pneumovax 23, Januvia/Janumet, and the Animal Health business.

This growth was partially offset by lower sales of Zetia/Vytorin, and Isentress. Its other revenues decreased 51.0% to $162.0 million in 4Q17.

Merck & Co.’s gross margin decreased to ~74.6% in 4Q17, a marginal decrease compared to ~74.8% in 4Q16. The company’s net profit margin improved to 25.5% in 4Q17 for 1.1% growth compared to 24.4% in 4Q16, driven by its lower operating expenses during the quarter.

Revenues for 2017

Merck’s revenues reported 1.0% growth at constant exchange rates to ~$40.1 billion in 2017. This growth was driven by strong sales of Keytruda, the Gardasil franchise, Zepatier, Pneumovax 23, Simponi, Bridion, and the Animal Health business. 

This growth was partially offset by lower sales of Januvia/Janumet, Zetia/Vytorin, and Isentress. Its other revenues decreased 27.0% to $857.0 million in 2017.

Margins

Merck & Co.’s gross margin improved to 76.5% in 2017, representing 1.2% growth compared to 75.7% in 2016 and driven by lower cost of sales. The company’s net profit margin improved to 27.2% in 2017 for 0.7% growth compared to 26.5% in 2016. This trend was due to lower operating expenses in 2017.

Merck’s Keytruda is approved for the treatment of advanced gastric cancer. Other drugs for the treatment of gastric cancer include Eli Lilly & Co.’s (LLY) Cyramza, Sanofi’s (SNY) Taxotere, and Genentech’s Herceptin and Xeloda. 

However, Merck KGaA and Pfizer (PFE) announced in November 2017 that the drug Bavencio (avelumab) didn’t meet its primary endpoints of superior overall survival for the treatment of unresectable, recurrent, or metastatic gastric cancer.

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