Merck’s $15 bln acquire is stingy
NEW YORK, Oct 1 (Reuters Breakingviews) – Merck’s (MRK.N) potential tablet for Covid-19 hit it out of the park, at the very least for buyers. In sufferers with much less severe sickness however with threat elements like previous age, it cuts hospitalizations and deaths by about 50%, the corporate stated learn extra , sending the New Jersey-based firm’s market worth up $15 billion Friday. That may be too stingy.
Merck stated in June the U.S. authorities agreed to pay about $700 per affected person for the drug learn extra . Some nations pays much less, and the agency has licensed it to Indian drugmakers.
But assume Merck prices $700 and earns a internet margin of 60%, an assumption based mostly on Gilead Sciences’ (GILD.O) expertise with its Hepatitis C drug. That would imply $420 of revenue per affected person. It would take about 35 million, lower than 5% of the U.S. and European Union inhabitants, to justify Merck’s acquire in worth.
About two-thirds of Americans have had at the very least one vaccine dose, and new American instances of Covid-19 are on the decline for now. But the pandemic has taught the worth of preparation and issues like booster photographs learn extra . Merck plans to supply 10 million programs this yr. It’s simple to think about governments ordering multiples extra. (By Robert Cyran)
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