Merck is an A+ credit, a global oncology powerhouse, and still, about half its 2024 pharma revenue came from a single product: Keytruda, a product whose loss of exclusivity will hit around 2028 in the U.S. S&P Global Ratings calls that kind of concentration a “material weakness.”
Merck isn’t alone. A new S&P analysis of 17 top pharmaceutical companies, released today, finds Novo Nordisk in a similar position. More than half of its revenue rides on one product (semaglutide), well above the peer average. For Eli Lilly, the GLP-1 wave has created enviable 20%+ growth rates, though the company remains heavily weighted toward diabetes, a concentration S&P expects to ease as obesity and other indications expand.
The dynamics differ by company. Keytruda’s breadth across oncology indications provides some buffer against competitive pressure. Gilead’s situation is trickier: its newer HIV products are expected to cannibalize earlier-generation drugs. As a result, concentration risk compounds rather than diversifies.
The report quantifies what keeps pharma CFOs up at night: without continuous reinvestment in R&D and M&A, revenues would decline roughly 9% annually. U.S. companies have responded by devoting about 16% of revenue to acquisitions, double the European rate, which has supported growth but gradually eroded credit ratings as leverage increased.
That math helps explain the deal announcements piling up in the run-up to next week’s JPMorgan Healthcare Conference, from Amgen’s up to $840 million Dark Blue buy to Lilly’s $55 million upfront obesity bet with Nimbus.
But S&P argues the urgency is also a matter of where the profits are concentrated. Even if tariffs remain more threat than reality, the agency says the broader U.S. policy backdrop has shifted enough to make dependence on the American market riskier than it used to be: “Given industry pressures and risks of drug price reform, tariffs, and other regulatory changes in the U.S., we view geographic concentration in the country as more of a risk than in the past, notwithstanding more favorable prices and margins.”
Filed Under: clinical trials, Drug Discovery, Oncology
