What's In The Cards For Merck KGaA (MKGAF) In Q1 Earnings?
Zacks Investment Research | May 13, 2018 09:40PM ET
Merck (NYSE:MRK) KGaA industry ’s rally of 0.8%.
The company reports results under three business sectors — Healthcare, Life Science and Performance Materials.
Merck’s revenues were driven by organic sales growth in its Healthcare and Life Science segments in the fourth quarter. We expect to see the same trend in the upcoming quarterly results.
In December 2017, Merck’s multiple sclerosis drug, Mavenclad was approved in Australia and Canada, following its approval in Europe in the third quarter of 2017. The expansion in new geographies is likely to boost sales of the drug in the to-be-reported quarter.
Moreover, in 2017, Bavencio was approved in the United States, Europe and Japan for Merkel cell carcinoma. The drug was also approved for advanced bladder cancer in the United States in 2017. Healthcare sales are likely to get a boost. The company develop Bavencio in partnership with Pfizer Inc. (NYSE:PFE) for several cancer indications.
Sales of three key drugs — Rebif, Erbitux and Gonal-f — are expected to be lower in first-quarter 2018. The downside is likely to be caused by persistent competitive pressure and price reduction. Moreover, unfavorable currency movement is anticipated to dent the top line.
Moreover, operating expenses increased in 2017 due to new launches and higher pipeline development cost. Expenses are estimated to increase in the first quarter as the company focuses on the development of an innovative pipeline, launch of Bavencio in new geographies as well as Mavenclad.
In 2017, the company divested its biosimilar business and is currently considering strategic options for its Consumer Health segment.
Merck is also focused on the development and protection of its novel DNA-sequencing technology – CRISPR. In February, the technology was issued patents in Korea and Israel. This can also increase the expense for the company.
We expect management to shed light on the progress and commercialization plans for Bavencio on the earnings call. The company is likely to provide updates on its strategic plans.
Merck KGaA Price and EPS Surprise
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