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Merck takes US$1.9b writedown as hepatitis C market shrinks

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Merck & Co, one of the US's biggest drugmakers, will write down most of what it paid for a promising, experimental hepatitis C drug in 2014, partly because of the extreme success of other new therapies has left a shrinking market.

[NEW YORK] Merck & Co, one of the US's biggest drugmakers, will write down most of what it paid for a promising, experimental hepatitis C drug in 2014, partly because of the extreme success of other new therapies has left a shrinking market.

In a filing Thursday, Merck said it would take a US$2.9 billion charge, or US$1.9 billion after taxes, on uprifosbuvir, which it bought in 2014 in its US$3.9 billion acquisition of Idenix Pharmaceuticals Inc. and is still in clinical trials. Merck said it now values the drug at US$240 million.

The market for treatments for Hepatitis C, a virus that attacks the liver and can lead to cirrhosis or liver cancer, has been declining recently, with fewer patients to treat following major breakthroughs in science that brought to market highly effective, fast-working therapies.

Gilead Sciences Inc, the leader with three main hepatitis C treatments, earlier this month took investors by surprise when it forecast 2017 sales for the drugs that were well below analysts' projections, saying its franchise was fading faster than it would have predicted last year as the pool of new patients dried up.

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Abbvie Inc and Merck's own Zepatier franchise have crowded the market and driven down pricing. Zepatier was approved by the US Food and Drug Administration in 2016.

Merck said in the filing that it "determined that recent changes to the product profile, as well as changes to its expectations for pricing and the market opportunity, taken together constituted a triggering event that required the Company to evaluate the uprifosbuvir intangible asset for impairment."

It also cut its fourth-quarter earnings to a loss of 22 US cents a share from a profit of 42 US cents.

In an e-mailed statement, Merck said it remains committed to current trials for for uprifosbuvir. "We also remain encouraged by our progress with the launch of Zepatier, including our ability to gain access across public and private payers in the US and initial uptake in the European Union and Japan." Merck shares fell 0.5 per cent to US$65.52 in late US trading.

Hepatitis C affects 130 million to 150 million globally, according to the World Health Organization, and the Centers for Disease Control has said as many as 4 million Americans may have chronic hepatitis C infections.

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