As we approach the close of the second quarter, I might point more directly to the non-improvement in currencies (from Merck’s perspective), and the developments in India over the patentability of Januvia® — but I do agree with BMO’s analysts that $54 may have been a little overheated, in the near term.
Even so, BMO keeps its “outperform” rating/outlook on Merck, as do I — though my reasons have more to do with the amount of “financial machinery” leverage the behemoth possesses at the moment (buyback, etc. as a tax advantaged way to repatriate those massive, and growing, foreign earnings), to tell the truth.
I agree with BMO, though — I wouldn’t bet against Merck this year. In the near term, I’d expect J&J’s on-market Invokana® to eat into Merck’s Januvia share more than the not yet approved SGLT2 “candidate” diabetes drugs — but why quibble? We both agree that Januvia’s superbly-upramped rollout, measured in worldwide sales increase rates, is almost certain to slow down. It won’t flatten out completely, but it will slow down.
Here is a bit of the update, via Benzinga — do go read it all:
. . . .New data from SGLT2 drugs presented at the ADA and supporting expert feedback lead us to believe that these drugs will compete directly with. . . Januvia for the post metformin type-2 diabetes patients. . . . [T]hey have low risk for hypoglycemia and typically produce 2-3Kg weight loss and modest blood pressure reduction. . . . .
Do stay tuned — this will be a revolution, in the diabetes management space — over the course of the next three or so years.