) recently announced that the U.S. Food and Drug Administration
(FDA) has approved its site at Durham, N.C. for the manufacture
of bulk varicella for use in Merck's chickenpox and shingles
Merck intends to get the site approved in future for the
production of bulk and finished product for other childhood and
shingles vaccines as well. Earlier in 2010, the Durham site had
gained approval for the production of finished chickenpox
With the latest approval, Merck will be able to boost its
vaccine supply and meet the growing demand for its shingles
vaccine, Zostavax. Zostavax sales have been increasing with Merck
reporting first half 2013 sales of $309 million, up 37.9% from
the year-ago period. Zostavax is a key growth driver for Merck.
According to the company, a little more than 20% of the targeted
U.S. population (age ≥ 60 years) has been vaccinated - this means
that there is still a major part of the targeted population that
needs vaccination thereby representing huge opportunity for
Demand should increase further with the UK recommending
Zostavax for the routine vaccination of individuals aged 70 (and
79 years catch-up cohort) for the prevention of shingles and
shingles-related post-herpetic neuralgia from Sep 1, 2013.
Meanwhile, Merck has started launching Zostavax in some Asian
markets like Korea and expects to launch in additional markets
Merck's other varicella-containing vaccine, Varivax, should
also benefit from the increased supply. Previously, Merck's
varicella-containing vaccines were being produced at its West
Point, Pa., facility.
We note that Merck has been working on expanding its vaccines
manufacturing capabilities over the last several years during
which the company invested more than $1 billion on the same. In
addition to modernizing and expanding vaccine operations at its
West Point and Elkton, Va. facilities, Merck has also set up a
new facility in Carlow, Ireland. The Carlow facility is slated to
get a license next year.
Merck currently carries a Zacks Rank #3 (Hold). Currently,
Gilead Sciences Inc.
) look well-positioned with all three being Zacks Rank #1 (Strong
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