Is More Patent Pain Headed Merck & Co., Inc. (MRK)’s Way?

Merck & Co., Inc. (NYSE:MRK) might be one of big pharma’s largest companies, but this health care leader has had a tough go recently. The company’s pessimistic earnings report this week showed just how badly patent-related losses have hurt Merck & Co., Inc. (NYSE:MRK), as its sales plunged by more than 10% year-over-year in the second quarter. Even though investors largely expected a significant blow from former lead blockbuster drug Singulair, which lost patent protection last year and has seen revenue eroded substantially, Merck & Co., Inc. (NYSE:MRK)’s decline is troubling for shareholders.

This company’s pipeline offers some hope for the future, but it might not be enough to counter Singulair’s losses — and even more patent expirations are headed Merck’s way. Let’s take a look at the company’s drugs that are soon set to lose patent protection and hit sales in a big way.

Zetia, Vytorin, and Merck’s at-risk portfolio
The good news for investors is that no one drug on the tail end of its patent life is set to risk as much in sales as Singulair has. Singulair once recorded $5 billion in annual revenue for Merck & Co., Inc. (NYSE:MRK), and the drug’s loss of patent exclusivity has been a hammer blow right up there with Pfizer Inc. (NYSE:PFE)’s Lipitor and other major blockbusters to hit the patent cliff recently.

Unfortunately, a few smaller blockbusters will face patent expirations soon. Chief among Merck’s at-risk drugs is the cholesterol-fighting combo of Zetia and Vytorin, which will lose patent protection in 2017. According to Merck’s 2012 annual report, a generic version of Zetia is allowed to launch in December 2016.

Zetia and Vytorin put a significant chunk of Merck & Co., Inc. (NYSE:MRK)’s revenue at risk. Together, the two drugs fueled more than $4.2 billion in sales last year. That was more than 10% of the company’s total pharmaceutical revenue, and few of the company’s largest medications are growing at a rate that will combat the two drugs’ patent expirations.

Zetia and Vytorin aren’t the only two drugs at risk. Allergy and respiratory treatment Nasonex’s first patents are set to expire next year, but generic competition likely won’t arrive until more patents expire in 2018. The drug delivered more than $1.2 billion in sales next year, although recent revenue growth has been slow: Nasonex’s sales actually slumped been 2011 and 2012 and rose only slightly between 2010 and 2011.

A dozen other drugs with smaller sales will lose patent protection between now and 2019. While none of these medications — from oncology drug Temodar, which pulled in more than $900 million in sales last year and will lose protection next year, to small-time fertility drug Follistim AQ, which pulled in revenue of around $470 million last year — provide a major part of Merck & Co., Inc. (NYSE:MRK)’s sales firepower, they add up to a big bite out of the company’s financial foundation.

Offsetting the patent cliff
Merck’s pipeline offers up several drugs that should help ease the pain. Osteoperosis drug odanacatib has looked extremely promising in clinical trials. While Merck delayed its regulatory filing for odanacatib until next year, the drug’s still poised to take advantage of Eli Lilly & Co. (NYSE:LLY)‘s patent loss of its blockbuster bone drug Evista next year. Eli Lilly & Co. (NYSE:LLY) will shore up Evista’s loss with fellow osteoporosis drug Forteo, but the expiration still opens the door for odanacatib’s arrival.

Still, Merck & Co., Inc. (NYSE:MRK)’s most promising pipeline candidate will face tough competition from Amgen, Inc. (NASDAQ:AMGN)‘s osteoporosis drug Prolia. Prolia’s gotten off to a slow start since its regulatory approval a few years back, but it and fellow Amgen, Inc. (NASDAQ:AMGN) bone drug Xgeva could eclipse the $1 billion annual sales mark in the future. Considering that the rest of Merck’s pipeline is average at best, the company will need every dollar of odanacatib to offset losses from Zetia, Vytorin, and other lead drugs set to lose patent protection before 2020.

Ultimately, Merck & Co., Inc. (NYSE:MRK) needs diabetes blockbusters Januvia and Janumet, which reaped more than $5 billion in revenue last year, to perform much better. The two drugs saw only slight growth in the disappointing second quarter. If Merck wants to bounce back from Singulair’s losses and beat its oncoming patent expirations, Januvia and Janumet must do better.

The article Is More Patent Pain Headed Merck’s Way? originally appeared on Fool.com and is written by Dan Carroll.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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