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About Intervet Inc.

Merck makes medicines for many maladies, from stuffy noses and asthma to hypertension and arthritis. The pharmaceutical giant's top products include diabetes drugs Januvia and Janumet, cancer drug Keytruda, HPV vaccine Gardasil, cholesterol combatants Vytorin and Zetia, and hypertension fighters Cozaar and Hyzaar. In 2017, Keytruda was the first cancer drug based on tumor genetics to be approved by the FDA; it has been approved for metastatic lung cancer and for several other indications. In addition, Merck makes childhood and adult vaccines for such diseases as measles, mumps, pneumonia, and shingles, as well as veterinary pharmaceuticals through Merck Animal Health. In addition, the company provides analytics and clinical services and technology to the health care sector.

Operations

Merck operates through four segments: Pharmaceutical, Animal Health, Healthcare Services, and Alliances. The Pharmaceutical segment, which accounts for more than 75% of revenues, includes human pharmaceuticals and vaccines. It has a broad portfolio of marketed and development-stage pharmaceuticals in areas including respiratory health, metabolism, infectious disease, cardiovascular, immunology, women's health, endocrinology, and oncology.

The other segments are much smaller. Animal Health develops, manufactures, and markets animal health products including vaccines. The Healthcare Services segment provides offerings around data analytics and clinical services. Alliances is largely composed of results from a partnership with AstraZeneca (which was terminated in mid-2014).

Best-selling drugs in the Pharmaceutical segment include type 2 diabetes drugs Januvia and Janumet, which bring in about $5.9 billion in revenues annually. Other products earning more than $2 billion include cancer drug Keytruda, HPV vaccine Gardasil, and cholesterol medications Zetia and Vytorin. Meanwhile, $1 billion top sellers include HIV therapy Isentress, hepatitis treatment Zepatier, and chickenpox vaccine ProQuad.

Despite its blockbuster successes, Merck is subject to the same threat to its bottom line as all pharmaceutical companies large and small: patent expiration. To offset the financial impact of patent losses, the company works to release new drugs to replace the aging products.

Geographic Reach

Merck markets its products in over 140 countries, with its largest market -- the US -- accounting for around 45% of revenues. Some international products are marketed under the MSD (short for Merck Sharp & Dohme) brand. The EMEA (Europe, Middle East, and Africa) region accounts for about 30% of sales, while the Asia/Pacific region (minus Japan) accounts for 10%. Japan accounts for nearly 10%, and Latin America brings in about 5%.

Merck's US commercial operations are based in Pennsylvania. Its domestic pharmaceutical business is based in Pennsylvania and New Jersey. The Animal Health segment is also headquartered in New Jersey.

The company operates principal research facilities in California, New Jersey, Pennsylvania, Massachusetts, and Nebraska. Outside of the US, it has research facilities in China and Switzerland.

Merck's US manufacturing operations are headquartered in New Jersey. It has another nine production facilities throughout the nation and in Puerto Rico. Outside of the US, it owns or has interests in manufacturing sites and other properties in Japan, Singapore, South Africa, and other countries in Asia, the Americas, and Western Europe.

Sales and Marketing

Merck markets its products through direct sales forces and international distributors. Customers include drug wholesalers, retailers, pharmacies, government agencies, and health care providers. Animal health products are sold to veterinarians, animal producers, as well as distributors. Some of Merck's products are sold through partnerships or joint ventures with other drug makers. For instance, Johnson & Johnson markets anti-inflammatory drugs Remicade and Simponi in the US, while Merck has marketing rights in Europe, Russia, and Turkey.

The company spent $2.1 billion on advertising and promotion in 2017; it spent the same amount in 2016.

Financial Performance

Despite having a few blockbusters in its portfolio, Merck's revenues fell in 2014 and 2015. Revenues have since been climbing but have yet to reach the $44 billion mark that Merck surpassed in 2013. New drug launches, such as the releases of Keytruda and Zepatier, have helped boost sales. However, these gains have been offset by the launches of generic competitors of such products as Zetia (aka Ezetrol) and Remicade. Net income has been quite volatile, coming in at figures between $2.4 billion and $11.9 billion over the past five years.

In 2017 revenue increased 1% to $40.1 billion, as the company launched new drugs (including Keytruda, which was given approval for several new indications) and the Animal Health business performed well. Sales of Pneumovax 23 and Adempas increased that year, too. Additionally, Merck reported international vaccine sales that were previously made in partnership with Sanofi Pasteur. But a number of Merck's drugs have recently lost their patent exclusivity, which has brought an array of generic and biosimilar competitors to the market. In the US alone, sales dropped 6% in 2017. International sales rose 6% that year.

Net income fell 39% to $2.4 billion in 2017. Taxes on income, which rose from $718 million to $4.1 billion, had an impact on profits. The company took a charge to repatriate foreign profits under new federal tax laws.

The company ended 2017 with $6.1 billion in cash and cash equivalents, or 6% less than what it had at the end of 2016. Operating activities provided $6.4 billion and investing activities provided $2.7 billion, but financing activities -- primarily proceeds from the issuance of debt in 2016 -- used $10 billion that year. 

 

Strategy

Merck is investing in the development of new drugs, and in securing additional approvals for existing drugs, in order to combat sales declines from patent losses. In 2016 and 2017, Merck lost market exclusivity for drugs including Zetia, Vytorin, Cubicin, and Cancidas. One of the key strategies to fill its pipeline is to seek out external opportunities in the R&D arena. For example, it is working with AstraZeneca to study cancer drugs Lynparza and selumetinib. In 2017 it acquired Rigontec and Vallée, adding more products to its pipeline. The company also targets international markets, including emerging and developed nations, by partnering with others. Brazil, China, and Japan are target markets, as are nations in the Middle East, Africa, and Eastern Europe.

The company has additionally ramped up its own R&D activities to push new products through its pipeline, with a focus on bringing its most promising late-stage candidates to market. Its clinical-stage candidates are being studied in several disease areas including cancer, cardiovascular disease, diabetes, infectious disease, inflammatory disease, and respiratory disease. R&D expenses totaled $10.2 billion in 2017, up from $10.1 billion in 2016 and $6.7 billion in 2015.

In addition to creating new medicines, the company works to gain approval for new indications on existing drugs. In 2017 it received several such approvals, such as expanded indications for Keytruda. In fact, the company is betting big on Keytruda, which has become a top seller (nearly tripling its sales in 2017) and has had positive results shrinking tumors. There are more than 700 clinical trials for the drug, which is being tested for more than 30 types of cancer. This heavy focus on Keytruda accounts for a significant part of Merck's total R&D budget.

Like all pharmaceuticals these days, Merck faces pressure to lower the prices of its drugs. In mid-2018, the company announced plans to cut the price of Zepatier by 60% and to cut the prices of several other drugs by 10%.

Mergers and Acquisitions

Merck acquired privately held firm Antelliq for $2.4 billion in 2019. Antelliq specializes in digital devices for animal identification and tracking, which can help predict and treat disease. Its technology is used on livestock, pets, and fish and aquaculture. 

In another deal, Merck is buying biotech Immune Design for some $300 million. It will gain access to Immune Design's two in vivo technology platforms, which are being used to develop vaccines, especially for cancer.

The company acquired Australian biotech Viralytics for $394 million in mid-2018. Viralytics is a vaccine-based cancer specialist; its Cavatak oncolytic is being tested on its own and in combination with Merck's Keytruda for its effect on tumors. In 2017 the company acquired German start-up Rigontec in a deal valued at some $603 million. Both of those deals boosted Merck's immuno-oncology platform.

In 2017, Merck acquired a controlling stake in Vallée, a Brazil-based animal health products firm, for $400 million. With that purchase, the company strengthened its Latin American operations, particularly in the livestock animal market.

In 2016 the company bought IOmet, a UK drug discovery firm with a focus on immuno-oncology and cancer metabolism, for $150 million. It then acquired Afferent Pharmaceuticals for $500 million in cash plus milestone payments of up to another $750 million. Afferent is developing a couple of treatments for chronic cough.

 

Intervet Inc.

29160 INTERVET LN
Millsboro, DE 19966-4217
Phone: 1 (302) 934-4341

Stats

Employer Type: Privately Owned
Territory Manager Intervet Schering Plough Animal Health: Kasha Cox
Administration Staff: Lynn Miller
Director of Research and Development Senior Database Administrator: Mark Thompson
Employees (This Location): 500
Employees (All Locations): 800

Major Office Locations

Millsboro, DE

Other Locations

De Soto, KS
Rushmore, MN
Worthington, MN
Charlotte, NC