The company has also filed for label extensions, which will provide further growth opportunities. It signed a new distribution agreement for these drugs with Merck & Co., Inc. (NYSE:MRK), giving up marketing rights in 150 markets including Canada, Central and South America, and the Middle East and North Africa, or MENA, region. With this agreement, the immunology segment expects year-over-year revenue growth of 15.5% to $9.09 billion, with adjusted EPS of $5.50 this year from EPS of $5.11 last year.
Blockbuster drugs leading from the front
Merck & Co., Inc. (NYSE:MRK)’s Gardasil drug, used to treat cervical cancer, reported year-over-year growth of 37% to $390 million in the first quarter. The continuous uptake in the U.S. and other international markets propelled this strong performance. The U.K. is using it in the Human Papillomavirus Quadrivalent, or HPV, vaccination program across all its schools. With wide acceptance and the ability to treat cancer patients more effectively, it will help Merck & Co., Inc. (NYSE:MRK) gain competitive advantage over GlaxoSmithKline plc (ADR) (NYSE:GSK)’s “Cervarix” in other countries also.
Furthermore, the International Agency for Research on Cancer, reported that this cancer virus is three times more prevalent in men than women, and men are four times more likely to develop oropharyngeal cancer. The gardasil vaccine received approval from regulatory bodies to vaccinate men also. Therefore, it expects report year-over-year revenue growth of 30% to $2.12 billion this year and $2.34 million next year.
The company’s animal healthcare product segment reported year-over-year revenue growth of 2% to $840 million in the first quarter ended in March 2013. Its new product “Activyl” acted as the main driver for this growth, which treats and prevents fleas and ticks in dogs and cats. With a rise in animal-related diseases, like swine flu and bird flu, Merck & Co., Inc. (NYSE:MRK) is continuously focusing on developing new improved drugs to cure these diseases.
It will likely increase research and development, or R&D, expenses to develop new drugs as the percentage of gross profit increased to 17.3% this year from 15.3% last year. This enables the company to monetize the opportunities present in animal healthcare.
Conclusion
With increased health concern and spending on the treatment of various diseases, the companies in this industry are looking to enhance their foothold by introducing new and improved drugs. Pfizer Inc. (NYSE:PFE) expects to enhance its revenue with approval from regulatory bodies for its Eliquis sNDA and Xeljanz drugs. Johnson & Johnson (NYSE:JNJ) anticipates grabbing future growth opportunities with its acquisition of Aragon Pharmaceutical and growth of its immunology drugs. Merck & Co., Inc. (NYSE:MRK)’s blockbuster drugs should boost its revenue and offer greater opportunities in the future.
The article Will Healthcare Take Care of Your Portfolio originally appeared on Fool.com and is written by Madhukar Dubey.
Madhukar Dubey has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Madhukar is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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