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cover of episode Merck & Co: Blockbuster Drugs - [Business Breakdowns, EP.189]

Merck & Co: Blockbuster Drugs - [Business Breakdowns, EP.189]

2024/10/30
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Business Breakdowns
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A
Ashwin Varma
Z
Zack Fuss
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Zack Fuss对默克公司的整体业务模式、Keytruda药物的成功以及未来面临的专利到期挑战进行了概述。他强调了默克公司丰富的历史和在肿瘤学领域的领先地位，并指出Keytruda药物对公司未来发展的重要性。他还讨论了默克公司如何通过研发和并购来应对未来的挑战。 Ashwin Varma深入探讨了默克公司的历史、商业模式、研发策略以及Keytruda药物的成功因素。他详细解释了制药行业的研发流程、专利保护机制以及药物定价策略。他还分析了Keytruda药物面临的竞争压力和未来挑战，并对默克公司的未来发展方向提出了自己的看法。他认为默克公司需要通过研发新药和并购来弥补Keytruda专利到期后的收入损失，并强调了公司领导层在决策中的重要性。

Deep Dive

Key Insights

Why has Keytruda become such a dominant drug in the pharmaceutical industry?

Keytruda's dominance stems from its broad clinical data across 40 different cancer indications, making it difficult for insurance companies to substitute it with other drugs lacking similar data breadth.

How does Merck's patent expiration for Keytruda impact its revenue?

Keytruda's patent expiration in 2028 could lead to significant revenue erosion, potentially closer to the Humira scenario where revenue was sustained post-expiration due to the difficulty in copying biologics like Keytruda.

What strategies does Merck employ to extend the life of its patents?

Merck uses a family of patents including formulation and process patents to extend the life of Keytruda beyond the primary IP expiration, leveraging multiple layers of protection.

How does Merck's organizational structure support its business model?

Merck's structure is divided into R&D and commercial arms, with a handoff from R&D to commercial once a drug is approved, though Keytruda's continuous clinical trials require parallel activity in both.

What are the key growth drivers for Merck post-Keytruda patent expiration?

Merck's growth drivers include the acquisition of drugs like Sotatercept for pulmonary arterial hypertension, advancements in autoimmune diseases like ulcerative colitis, and new cancer therapies using antibody drug conjugates.

How does Merck's leadership structure influence its strategic decisions?

Merck's success is tied to the effective partnership between the CEO and the chief of R&D, exemplified by the relationship between Ken Frazier and Roger Perlmutter, which was crucial for the development and execution of Keytruda.

What lessons can other pharmaceutical companies learn from Merck's approach?

Other pharma companies can learn the importance of a differentiated offering with broad clinical data, effective R&D execution, and strategic diversification to mitigate risks associated with patent expirations.

How does the pricing of Keytruda compare to its manufacturing cost?

Keytruda's list price is $191,000, while the manufacturing cost is approximately $19,000, highlighting the high gross margins in the pharmaceutical industry.

What role does clinical trial execution play in Merck's success?

Clinical trial execution is crucial for Merck's success, as seen with Keytruda, where Merck executed its clinical development faster and more effectively than competitors, leading to market dominance.

How does Merck's approach to R&D differ from traditional methods?

Merck has increasingly relied on acquisitions to fill its R&D pipeline, with nearly 70-80% of its upcoming drugs being acquired from other companies, reflecting a shift towards external R&D.

Chapters
This chapter explores Merck's rich history, from its humble beginnings as a family pharmacy to its current status as a nearly $300 billion market cap business. We discuss its blockbuster era, challenges, and the role of Keytruda in its recent success. We also touch upon the complex world of pharmaceutical patents and regulations.
  • Merck's transformation from a small pharmacy to a major pharmaceutical company
  • Keytruda's significant contribution to Merck's revenue
  • Challenges faced by Merck in the early 2000s
  • The importance of pharmaceutical patents and regulations

Shownotes Transcript

This is Zack Fuss. Today we are breaking down Merck, one of the world's largest and oldest pharmaceutical companies. The company has been shaping medicine and fostering innovation for over 130 years. From its humble beginnings as a small family pharmacy in Germany, today's iteration of Merck has transformed into a nearly $300 billion market cap business with particular strength in oncology. 

At the heart of Merck's recent success is Keytruda, arguably the world's most important cancer drug. This single medication now generates over $25 billion in annual revenue. But, Merck's story is not only about Keytruda, it's about a company that's consistently pursued innovative science, combined with a handful of bold decisions, which resulted in the development of some of the world's first vaccines and breakthroughs in diabetes treatment. 

To break down Merck, I am joined by Ashwin Varma, who is currently a medical student at UT Health San Antonio. We unpack Merck's business model, explore its industry-leading oncology franchise, and examine its pipeline of future drugs, and understand how they have navigated the complex world of pharmaceutical patents and regulation. Please enjoy this Breakdown on Merck. 

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.)

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes).

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)).

Show Notes

(00:00:00) Welcome to Business Breakdowns

(00:05:50) History and Evolution of Merck

(00:08:32) Merck's Blockbuster Era and Challenges

(00:10:51) Understanding the Pharma Industry

(00:15:32) Merck's Current Business and Financials

(00:20:48) Patent Protection and R&D Strategies

(00:35:00) Checkpoint Inhibitors: A Breakthrough in Cancer Treatment

(00:35:54) The Rise of Keytruda: From Trials to Triumph

(00:37:56) Keytruda's Expanding Indications and Market Impact

(00:39:56) Understanding Cancer Therapy Lines

(00:42:09) Keytruda's Competitive Landscape and Future Challenges

(00:46:33) Merck's Strategy for Post-Patent Success

(00:57:41) Leadership and Organizational Structure at Merck

(01:04:01) Lessons from breaking down Merck