Pharma's Market

SPECIAL REPORT

Healthy Horizons
A brand new series of weekly segments which will explore the macro and micro issues facing the global economy.

MORE HEADLINES

» Markets | Economy | Companies

- Health Care Bill Clears First Senate Hurdle

PHARMA'S MARKET VIDEO

» More

Cholesterol Drug Battle: Niaspan vs. Zetia 16 Nov 2009
Abbott Laboratories' Niaspan beat Merck's Zetia in a new study. CNBC's Mike Huckman has the details.

Cardiologist Grades Cholesterol Drug Study

16 Nov 2009

Abbott Laboratories' Niaspan beat Merck's Zetia in a new study. Dr. Steven Nissen, chairman of the Department of Cardiovascular Medicine at The Cleveland Clinic, shares his reaction with CNBC's Mike Huckman.

Merck's Cholesterol Drugs Under Pressure

16 Nov 2009

A new study is putting Merck's cholesterol drugs under pressure today, reports CNBC's Mike Huckman, with Ken Frazier, Merck Global Human Health president.

Cholesterol Drug Battle: Merck vs. Abbott Labs

16 Nov 2009

Abbott Laboratories' Niaspan beat Merck's Zetia in a new study. Barbara Ryan, pharma analyst at Deutsche Bank Securities, shares her reaction.

Cholesterol Drug Battle 16 Nov 2009
Abbott Laboratories' Niaspan beat Merck's Zetia in a new study. CNBC's Mike Huckman has the details.

Novo Nordisk CEO on Diabetes Epidemic

13 Nov 2009

Diabetes is a global epidemic that presents an estimated $25 billion drug and device market and some predict that number could double over the next several years. Lars Sorensen, CEO of Novo Nordisk, the world's largest diabetes care company, talks to CNBC's Mike Huckman.

RSS FEED

» Help

Subscribe to this RSS feed
Stay up to date with Pharma's Market.

CNBC ON DIGG

Merck’s Mega-Monday Morning

Published: Tuesday, 10 Nov 2009 | 10:26 AM ET

Text Size

By: Mike Huckman
CNBC Correspondent

Health Care Reform

Many analysts, lobbyists and industry executives have been saying for months that healthcare reform would probably end up being a net positive for the drug companies.

Presumably with more people being covered, big pharma could make up in volume what it might lose on government-negotiated price.

But now that the House has passed a bill Wall Street seems to be treating that theory like a sudden revelation. The AMEX pharmaceutical index and, in fact, all of the big pharma stocks, both foreign and domestic are higher. Novartis [NVS Loading... () ] hit a new high. And Merck [MRK Loading... () ] is getting an assist from an upgrade to the equivalent of “Buy” with a $38 target at Leerink Swann.

Analyst Seamus (Shay-mus) Fernandez actually put out two research notes to clients on MRK today. One is about the upgrade and the other is about the Zetia vs. Niaspan study that’s coming out in “The New England Journal of Medicine” and at the American Heart Association meeting at, according to Fernandez, 11:07 a.m. ET next Monday. Regarding the stock Fernandez writes, “We believe near-term concerns may offer liquidity opportunities to build, or add to, a position in MRK.”

One of those near-term concerns is the drug study called Arbiter 6. I know it sounds more like the name of a NASA space program, but there it is. Zetia is a stand-alone cholesterol-fighting drug owned by Merck and it’s also used in the company’s combo pill Vytorin (Zocor is the other ingredient.) Abbott Labs [ABT Loading... () ] makes Niaspan. Leerink Swann, which specializes in healthcare stocks, did a survey of more than a hundred docs: 31 cardiologists and 72 primary care physicians. A majority of the docs thinks Niaspan is the winner of the head-to-head battle. And if that’s true, the survey says Zetia/Vytorin prescriptions could fall 25-35 percent over a 12-month period. If that happens, Fernandez estimates Zetia/Vytorin sales could fall between $600 million and $900 million and that Merck’s earnings per share could take a 20-cent hit.

So, I guess on the one hand Fernandez is telling investors to brace themselves and, on the other, to be ready to buy MRK on the potential weakness. I’ll be reporting live from the AHA meeting in Orlando a week from today.

Update: The AHA says the embargo will lift on the Arbiter 6 data at 8 a.m. ET next Monday. I'm sure the companies appreciate the results not coming out during the trading day, so this will give analysts/investors a good hour-and-a-half to digest the data before the opening bell.

Why Health Care Bill Is Facing Such a Tough Fight in Senate

Questions? Comments? and follow me on Twitter at mhuckman