Merck’s cancer rush may spawn lower returns
20/10/2023 17:43
(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
NEW YORK, Oct 20 (Reuters Breakingviews) - Merck MRK.N
is loading up on cancer-killing arrows. The American drug
company said on Thursday it signed a giant deal with Daiichi
Sankyo 4568.T for the rights to sell three potential drugs
outside Japan. Merck will pay $4 billion upfront, up to another
$1.5 billion over the next two years, and as much as $16.5
billion if the drugs pass certain sales milestones.
It’s easy to see why. Merck’s Keytruda accounts for about
40% of the company’s revenue, and that cancer drug might face
cut-price competition before the end of the decade. Meanwhile,
Daiichi is a leader in making combinations of antibodies and
chemotherapeutic agents. When they work, these therapies
directly deliver toxins into cancerous cells. After decades of
fits and starts, the technology is booming. Daiichi’s oncology
revenue rose 142% in the last quarter, to $514 million.
The potential is giant, as these targeted therapies might
eventually account for a quarter of the current oncology market.
There is a snag: many other firms are also in the rush. Pfizer
PFE.N agreed in March to pay $43 billion for Seagen SGEN.O ,
another specialist in the tech. With over 100 of these drugs in
clinical trials, the stampede might lead to lower-than-expected
returns.(By Robert Cyran)
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(Editing by Jennifer Saba and Aditya Sriwatsav)
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