Key Points :
Merck is on the brink of a $10 billion takeover of Verona Pharma.
Part of the terms of the deal includes Verona's best-selling drug for COPD, Ohtuvayre.
The acquisition is to counterbalance Merck's inevitable loss of sales of Keytruda.
Key Background :
Merck's move for Verona Pharma follows increasing pressure on the top pharma giants to shore up their pipelines as impending patent losses loom. Merck's top oncology cancer immunotherapy drug, Keytruda, faces loss of patent in 2028. Keytruda alone generated close to $30 billion of revenues in 2024. While the patent loss is impending, the firm is making acquisition bets that can fill the loopholes and guarantee long-term growth.
Verona Pharma presents a solid opportunity. Its Ohtuvayre, an inhaled treatment for chronic obstructive pulmonary disease, is the first two-decade-approved non-steroid medicine. It is seeing robust demand and already holds a cornerstone position among revenues of the company with 96% earnings contribution in the first quarter of 2025. Over 25,000 prescriptions have been fulfilled in the U.S. within just a few months of product launch, demonstrating high marketplace acceptance.
The prospective takeover falls under Merck's broader corporate plan of buying short-term cash-generating assets. The company has been engaged in mergers and acquisitions in recent years. Merck paid $10.8 billion in 2023 to buy Prometheus Biosciences, a biotech company that is working on immunology-targeted therapies. In addition, Merck has recently been in negotiations to acquire MoonLake Immunotherapeutics and signed a licensing deal up to $2 billion with Jiangsu Hengrui for a cardio treatment.
Aside from driving top-line growth, the Verona acquisition also enables Merck to increase its footprint in the respiratory area—a space that, although traditionally playing catchup from an innovation standpoint, is now reflecting emerging commercial traction. Other diseases in the respiratory pipeline of Verona include asthma, bronchiectasis, and cystic fibrosis, which could similarly offer future growth opportunities.
The industry as a whole is trying to cope with what analysts have termed a "patent cliff" when the majority of blockbusters will lose exclusivity between 2025 and 2028. Merck is among a number of firms to be pre-empting this by gaining access to next-generation treatments already approved or in late-stage development.
Were this done, this merger would not only establish Merck as the unchallenged master of chronic respiratory ailment but also a thoroughly acceptable policy of insurance against future financial strain as patent erosion and price control redefine the pharma industry.