How Important Is Keytruda To Merck?
Merck’s (NYSE:MRK) Oncology segment accounts for 15% of its value, according to our estimates. While the segment accounted for just about 5% of the company’s total 2016 revenues, we expect its revenue contribution to steadily increase going forward. Take a look at our interactive dashboard of Merck’s business, which shows how the oncology drugs, especially Keytruda, will perform in the coming years. Below we explain in more detail.
Oncology Drugs Will Likely Account For Larger Percentage of Revenues Going Forward
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We expect Oncology drugs to account for 15% of Merck’s total revenue by the end of our forecast period in 2024, compared to 5% in 2016 (see A Quick Look At Merck’s Oncology Segment).
Keytruda Is The Key Drug Within The Oncology Segment
Keytruda is the company’s most important drug within its Oncology segment. The charts below show the current and forecast revenues for Merck’s total Oncology portfolio, as well as Keytruda, Emend and Temodar. 
Keytruda was initially approved for advanced Melanoma, but saw its usage expand to multiple other areas. It has a large addressable market because of its approval for lung cancer. The commercial opportunity is huge due to a larger population of potential patients. Lung cancer is one of the most prevalent cancer types in the world, both in terms of incidence and mortality.
Keytruda Peak Sales
Keytruda peak sales are touted to be as high as $16 billion. Trefis estimates the sales to be around $6 billion by 2024. That said, our estimates could change significantly depending on future approvals. The drug is currently being tested under phase III for additional indications, including Breast, Renal, Gastric, Liver, and Prostate cancer, among others Last week, the FDA granted breakthrough therapy designation to the combination of Merck’s Keytruda and Japan-based Eisai’s Lenvima, as a potential treatment for kidney cancer.
- 2014 – Advanced Melanoma
- 2015 – Advanced Non-Small Cell Lung Cancer
- 2016 – Metastatic Head and Neck Squamous Cell Carcinoma
- 2017 – Classical Hodgkin Lymphoma, Metastatic Urothelial Carcinoma, and Solid Tumor with a Specific Genetic Feature
Our current price estimate for Merck stands at $64, implying a premium of over 10% to the current market price.
See our complete analysis for Merck
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