This bears repeating: as New Merck wends its way through a series of deals (like the AstraZeneca buy-back of Nexium® deal announced this morning -- bringing in $647 million in April), in the next few months, Cozaar and Hyzaar sales are going to plummet. The deals are intended to offset, at least in part, the effect of the loss of a $3.5 billion per year patent position in Cozaar®/Hyzaar®. Thus, from this morning's SEC Form 10-K (at the top of page 16):
. . . .The patents that provide U.S. market exclusivity for Cozaar and Hyzaar expire in April 2010. In addition, the patent for Cozaar will expire in a number of major European markets in March 2010. Hyzaar lost patent protection in major European markets in February 2010. The Company expects that sales of these products will decline rapidly after expiration of these patents, particularly in the United States since there are expected to be multiple sources of generic products at the time of patent expiry. In addition, the patent that provides U.S. market exclusivity for Singulair expires in August 2012. The Company expects that within the two years following patent expiration, it will lose substantially all U.S. sales of Singulair, with most of those declines coming in the first full year following patent expiration. Also, the patent for Singulair will expire in a number of major European markets in August 2012 and the Company expects sales of Singulair in those markets will decline significantly thereafter. . . .
[Page 24] . . . .The Company cannot state with certainty when or whether any of its products now under development will be approved or launched; whether it will be able to develop, license or otherwise acquire compounds, product candidates or products; or whether any products, once launched, will be commercially successful. The Company must maintain a continuous flow of successful new products and successful new indications or brand extensions for existing products sufficient both to cover its substantial research and development costs and to replace sales that are lost as profitable products, such as Fosamax, Cozaar and Hyzaar, lose patent protection or are displaced by competing products or therapies. Failure to do so in the short term or long term would have a material adverse effect on the Company’s business, results of operations, cash flow, financial position and prospects. . . .
These are going to be a very choppy few quarters for New Merck, trying to keep track of all the declines, and offsetting (largely one-time) increases. Keep your eye on the ball here, one and all.
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