Merck & Co (MRK) Morgan Stanley 24th Annual Global Healthcare Conference summary

Strategic transformation and business development

• Transformation is underway with successful product launches and positive clinical data readouts, many ahead of schedule, with more catalysts expected this year including additional data and potential filings.

• Recent business development, such as the Terns deal, is contributing to growth, and the animal health division is expected to more than double in the next decade.

• Pipeline management treats internal and external assets equally, focusing on best science and embedding business development within discovery centers for optimal decision-making.

• Several new assets, including those from acquisitions and pipeline advancements, are not yet reflected in the $70 billion mid-2030s launch guidance, indicating potential upside.

• Plans to raise the $70 billion guidance are under consideration, with timing to be determined in the near term.

Policy and market access

• Focus remains on drug affordability and access, advocating for PBM and 340B reforms to address middlemen and ensure patient access to innovative medicines.

• Bipartisan legislative momentum is building for 340B reform, with supportive demonstration projects underway, though direct business impact is not material.

• Utilization management by insurers and PBMs is seen as a barrier to access, prompting ongoing engagement with Congress and the administration.

Pipeline and clinical development highlights

• The INT program with Moderna shows robust long-term efficacy in melanoma, with potential to expand into other tumor types if upcoming data supports broader application.

• Conservative expansion plans for INT focus on tumors with high TMB or IO sensitivity, with flexibility to broaden if data in less traditional indications is positive.

• Upcoming readouts in muscle-invasive bladder cancer and RCC will inform further development strategy and potential trial expansion.