Merck Reports Decrease in Pharmaceutical Revenue Due to COVID-19

Merck estimates that the novel coronavirus outbreak will decrease the company’s 2020 revenues by over $2 billion as social distancing and other precautions impact business, according to the company’s first quarter financial results.

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“The COVID-19 global pandemic poses challenges to all of us, including serious threats to the health of people, businesses and economies around the world,” Kenneth C. Frazier, chairman and chief executive officer said in an announcement. 

“Without question, our industry and our company have a unique ability and responsibility to help the world respond to this pandemic by working collaboratively to deliver solutions to coronavirus infection while also maintaining the supply of medically important products to those who need them.”

In the first quarter, Merck estimated that the overall impact of coronavirus on its revenue was immaterial. But company leaders anticipate a greater impact on revenues in upcoming quarters, with projected losses of approximately $1.7 billion for pharmaceuticals and $400 million for animal health products.

Nearly two-thirds of Merck’s revenue comes from physician-administered products, which are greatly being impacted by social distancing measures, fewer well visits, and delays in elective surgeries due to COVID-19, Merck noted.

“These impacts, as well as prioritization of COVID-19 patients at health care providers, are resulting in reduced administration of many of our human health products.”

Despite these anticipations, Merck is still able to continue investing in research and development (R&D) and growth in drivers. They will ensure that patients involved in clinical trials are able to continue their treatment and receive appropriate care and monitoring.

The company believes the negative impact will mostly be in the second quarter, with a gradual return to normality beginning late in the second quarter, and a full return to normal operations in the fourth quarter.

“In this challenging and unprecedented time, the quality of our first-quarter performance reflects strong demand for our portfolio of innovative products, continued commercial and clinical execution and the dedication and resilience of our employees around the world. The fundamentals of our business remain strong,” Frazier concluded.

Overall, the major pharmaceutical company still anticipates 2020 revenues between $46.1 billion and $48.1 billion, including a negative impact from foreign exchange of approximately 2.5 percent.

Merck has been at the forefront of efforts to accelerate the development of medicines and vaccines for COVID-19.

At the end of April, Merck joined nearly a dozen biopharmaceutical companies to boost COVID-19 drug discovery. 

The collaboration called the Accelerating COVID-19 Therapeutic Interventions and Vaccines (ACTIV) also includes government organizations such as Health and Human Services (HHS), CDC, FDA, and the European Medicines Agency.

“This powerful public-private partnership will focus and expedite R&D activities required to combat COVID-19,” says Maria C. Freire, PhD, president and executive director of the Foundation for the NIH. “Working in lock-step, the public and private sectors will maximize the chances of success and provide a roadmap to pre-emptively manage future threats.”

Together, the organizations plan to develop a framework for prioritizing vaccine and drug candidates, advancing clinical trials, coordinating regulatory processes, and leveraging assets among all partners to quickly respond to the COVID-19 and future pandemics. 

Coordinated by the Foundation for the NIH, the extensive partnership is part of the “whole-of-government, whole-of-America” response the Trump administration has led to tackle COVID-19. ACTIV will provide infrastructure, subject matter expertise and funding, and prioritize and facilitate the entry of some of the most promising COVID-19 candidates into clinical trials.