One crucial quote from Merck CEO Ken Frazier at an event for big-time investors in Manhattan shows the US drug giant at a crossroads
- US drug giant Merck hosted a swanky event on Manhattan's Upper East Side for investors on Thursday where it mapped out the future of the company.
- Cancer drug Keytruda has become Merck's top product and will continue to grow, Merck executives said. But "we do have tremendous growth opportunities beyond Keytruda," CEO Kenneth Frazier told the audience.
- The company is also preparing for leadership change at the top, after nearly a decade being led by Frazier.
- Click here for more BI Prime stories.
At a swanky, red-carpeted event that US drug giant Merck just hosted on Manhattan's Upper East Side, CEO Kenneth Frazier stood before a grand room, beneath a glittering chandelier, and took on a question he knew was on the audience's mind.
"Everywhere I go, the key question I hear from people is, 'What do you have beyond Keytruda?'" Frazier told the ballroom of big-time investors. Keytruda is the blockbuster cancer drug that's put Merck on top, bringing in about $7.2 billion in revenue worldwide last year, or almost 17% of the company's total sales.
Merck's stock has jumped almost 40% in the past year, giving the company a market value of nearly $220 billion. The company's Keytruda sales aren't immediately at risk from patent expirations, but investors have been focused on the product because of how much revenue it accounts for, and the rapidly-changing science of cancer drugs.
Here's how Frazier answered his own question:
"First of all, let me acknowledge that's an important question, and one I would have if I was in your shoes," he said. "But I think what we're going to be able to show you today is that we do have tremendous growth opportunities beyond Keytruda."
Mapping out the future of Merck
After nearly a decade of leadership by Frazier, Merck is preparing for transition at the top, though specifics aren't yet public. The company is likely to pick an internal candidate to succeed Frazier, such as Chief Marketing Officer Michael Nally, Chief Financial Officer Robert Davis, or Chief Commercial Officer Frank Clyburn, Bloomberg News reported yesterday.
At Thursday's event, Merck executives painted a picture of a company with promising drugs beyond Keytruda, including other cancer treatments, vaccines, and more, and a talented leadership team that's well-equipped for the next phase.
Keytruda is a type of immuno-oncology drug that harnesses the body's natural disease-fighting immune response to attack cancer. As these drugs showed promise, drugmakers like Merck tried them out in more types of cancer, getting them approved for multiple different areas.
Keytruda will continue to grow, executives like Clyburn said, describing the drug as a foundational part of cancer regimens on its own and as it is tested out in combinations with other medications.
Merck's other big areas include the diabetes drugs Januvia and Janumet, cervical cancer vaccine Gardasil, cholesterol-lowering drugs Zetia and Vytorin, HIV antiviral Isentress, and an animal health unit that brought in $4 billion last year.
There should be new opportunities for Merck in oncology, vaccines, and its portfolio of drugs used in hospitals in the next five years, Merck said on Thursday.
Merck also pointed to the smaller acquisitions it's made of late, including in cancer, and emphasized the research and development coming out of its own labs, like an experimental HIV drug that Merck believes has a lot of promise.
"We are not just a Keytruda company, although Keytruda is an extraordinary molecule," Frazier said towards the end of the Thursday event. "It has tremendous growth ahead of it. But we believe we have strength across oncology and the rest of our innovative portfolio."
- Read more:
- The CEO of Merck says he got the best advice of his life from his father over getting trendy new sneakers, and it helped him turn the company into a $210 billion drug giant
- We got an exclusive look at the pitch deck that buzzy startup Cardinal Analytx used to raise a $22 million round led by top investor John Doerr
- Pfizer just struck an $11 billion deal, and it marks an ambitious shift in the US drug giant's blockbuster cancer strategy
- We took the two-day, $1,300 'biotech for dummies' class where healthcare executives, HR managers, and investors catch up on science for the first time since high school