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MRK's Buyout Spree to Broaden Product Portfolio: Can it Aid Growth?
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Key Takeaways
Merck will acquire Verona Pharma for $10B to add COPD drug Ohtuvayre to its portfolio.
The Verona deal boosts Merck's cardio-pulmonary lineup with Ohtuvayre's dual inhibition therapy.
Merck's recent China biotech deals expand its pipeline beyond oncology amid Keytruda patent concerns.
Merck (MRK - Free Report) recently intensified its acquisition strategy, actively pursuing deals to enhance its development pipeline and broaden its product portfolio. To build its long-term portfolio, the company has invested heavily in strategic mergers and acquisitions (M&A) activity during the past couple of years.
Last week, Merck announced a definitive agreement to acquireVerona Pharma (VRNA - Free Report) for approximately $10 billion. With this deal, Merck will add Verona’s Ohtuvayre, approved for the maintenance treatment of chronic obstructive pulmonary disease (COPD). Ohtuvayre was approved by the FDA in June last year, while regulatory filings in the EU are expected soon.
The addition of Ohtuvayre is likely to strengthen Merck’s cardio-pulmonary pipeline and portfolio as the drug’s differentiated profile provides a significant edge over its competitors. The drug’s unique dual inhibition of PDE3 and PDE4 sets it apart from existing COPD treatments by combining bronchodilation and anti-inflammatory effects in a single inhaled therapy.
The transaction is expected to be closed in the fourth quarter of 2025. Once closed, Verona Pharma would mark Merck’s largest acquisition since its $10.8 billion takeover of immunology-focused Prometheus Bioscience in 2023.
Merck has been tapping Chinese biotechs for licensing deals in recent times. The company struck multi-billion-dollar deals with Hansoh Pharma, LaNova Medicines and Hengrui Pharma in late 2024. While the Hansoh deal added the investigational oral GLP-1 receptor agonist HS-10535 to Merck’s pipeline, the LaNova deal added the experimental bispecific VEGF/PD-1 antibody LM-299. With the Hengrui Pharma deal, Merck acquired rights to an investigational oral small-molecule lipoprotein(a) inhibitor, HRS-5346.
Importantly, these acquisition deals are aimed at Merck's continuous effort to diversify its business and grow its revenue base, which currently remains heavily dependent on its blockbuster PD-L1 inhibitor Keytruda. The company is looking for ways to diversify its product lineup, especially by growing its non-oncology business to navigate the potential challenges with the upcoming patent loss of Keytruda. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.
Big Pharma Players Set Sights on M&A Deals
M&A activity has picked up at a significant pace in 2025 in the pharma/biotech sector. Big pharma companies are constantly looking to diversify their revenue base while pursuing strategic assets in key growth areas.
Last month,Sanofi (SNY - Free Report) announced a definitive agreement to acquire Blueprint Medicines for a total deal value of up to $9.5 billion. Through this transaction, Sanofi is looking to add Ayvakit — an inhibitor of KIT and PDGFRA proteins with growing commercial traction — and several early-stage pipeline assets focused on systemic mastocytosis. Sanofi expects to close this deal in the third quarter of 2025.
Eli Lilly (LLY - Free Report) also recently announced its intent to acquire small biotech Verve Therapeutics for up to $1.3 billion. Post this acquisition, Lilly will add Verve’s pipeline of gene therapies targeting heart diseases. Lilly expects to close this deal in the third quarter of 2025.
AbbVie recently signed a definitive agreement to acquire privately held biotech Capstan Therapeutics for a total deal value of nearly $2.1 billion. The transaction will add Capstan’s lead asset, CPTX2309 — a potential first-in-class in vivo tLNP anti-CD19 CAR-T therapy — to AbbVie’s immunology pipeline.
MRK's Price Performance, Valuation and Estimates
Year to date, shares of Merck have lost 16.2% against the industry’s increase of 0.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.98 forward earnings, lower than 15.13 for the industry and its 5-year mean of 12.82.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings has declined from $8.94 per share to $8.85, while the same for 2026 has decreased from $9.77 to $9.66 over the past 60 days.
Image: Bigstock
MRK's Buyout Spree to Broaden Product Portfolio: Can it Aid Growth?
Key Takeaways
Merck (MRK - Free Report) recently intensified its acquisition strategy, actively pursuing deals to enhance its development pipeline and broaden its product portfolio. To build its long-term portfolio, the company has invested heavily in strategic mergers and acquisitions (M&A) activity during the past couple of years.
Last week, Merck announced a definitive agreement to acquire Verona Pharma (VRNA - Free Report) for approximately $10 billion. With this deal, Merck will add Verona’s Ohtuvayre, approved for the maintenance treatment of chronic obstructive pulmonary disease (COPD). Ohtuvayre was approved by the FDA in June last year, while regulatory filings in the EU are expected soon.
The addition of Ohtuvayre is likely to strengthen Merck’s cardio-pulmonary pipeline and portfolio as the drug’s differentiated profile provides a significant edge over its competitors. The drug’s unique dual inhibition of PDE3 and PDE4 sets it apart from existing COPD treatments by combining bronchodilation and anti-inflammatory effects in a single inhaled therapy.
The transaction is expected to be closed in the fourth quarter of 2025. Once closed, Verona Pharma would mark Merck’s largest acquisition since its $10.8 billion takeover of immunology-focused Prometheus Bioscience in 2023.
Merck has been tapping Chinese biotechs for licensing deals in recent times. The company struck multi-billion-dollar deals with Hansoh Pharma, LaNova Medicines and Hengrui Pharma in late 2024. While the Hansoh deal added the investigational oral GLP-1 receptor agonist HS-10535 to Merck’s pipeline, the LaNova deal added the experimental bispecific VEGF/PD-1 antibody LM-299. With the Hengrui Pharma deal, Merck acquired rights to an investigational oral small-molecule lipoprotein(a) inhibitor, HRS-5346.
Importantly, these acquisition deals are aimed at Merck's continuous effort to diversify its business and grow its revenue base, which currently remains heavily dependent on its blockbuster PD-L1 inhibitor Keytruda. The company is looking for ways to diversify its product lineup, especially by growing its non-oncology business to navigate the potential challenges with the upcoming patent loss of Keytruda. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.
Big Pharma Players Set Sights on M&A Deals
M&A activity has picked up at a significant pace in 2025 in the pharma/biotech sector. Big pharma companies are constantly looking to diversify their revenue base while pursuing strategic assets in key growth areas.
Last month,Sanofi (SNY - Free Report) announced a definitive agreement to acquire Blueprint Medicines for a total deal value of up to $9.5 billion. Through this transaction, Sanofi is looking to add Ayvakit — an inhibitor of KIT and PDGFRA proteins with growing commercial traction — and several early-stage pipeline assets focused on systemic mastocytosis. Sanofi expects to close this deal in the third quarter of 2025.
Eli Lilly (LLY - Free Report) also recently announced its intent to acquire small biotech Verve Therapeutics for up to $1.3 billion. Post this acquisition, Lilly will add Verve’s pipeline of gene therapies targeting heart diseases. Lilly expects to close this deal in the third quarter of 2025.
AbbVie recently signed a definitive agreement to acquire privately held biotech Capstan Therapeutics for a total deal value of nearly $2.1 billion. The transaction will add Capstan’s lead asset, CPTX2309 — a potential first-in-class in vivo tLNP anti-CD19 CAR-T therapy — to AbbVie’s immunology pipeline.
MRK's Price Performance, Valuation and Estimates
Year to date, shares of Merck have lost 16.2% against the industry’s increase of 0.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.98 forward earnings, lower than 15.13 for the industry and its 5-year mean of 12.82.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings has declined from $8.94 per share to $8.85, while the same for 2026 has decreased from $9.77 to $9.66 over the past 60 days.
Image Source: Zacks Investment Research
Merck currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.