Merck to fall more than 20 percent next year as its drug patents expire, Jefferies says

A scientist works in a Merck research lab.
John Tlumacki | The Boston Globe | Getty Images

Jefferies lowered its rating for Merck to underperform from hold, saying the company's financial results will be weaker than expected in coming years as its drugs lose out to generic competitors.

"Merck & Co. arguably has one of the most challenging patent expiry schedules ahead of it in the near to mid term out of the whole large cap pharma group," analyst Jeffrey Holford wrote in a note to clients Monday. "Patent expiries ... led us to lower our revenue and EPS estimates for Merck & Co. well below consensus in this update."

Holford lowered his Merck price target to $48 from $59, representing 23 percent downside from Friday's close.