5. Merck

Merck building
Not everything came up roses last year for Merck, which had a high-end budget in dollar terms but was middling when it came to the budget as a percentage of revenue.

R&D budget: $7.19 billion
Change from 2015: Up 7.3%
Total 2016 revenue: $39.8 billion
R&D budget as percentage of revenue: 18%

Merck had a major trial win last fall when its marketed checkpoint inhibitor Keytruda (pembrolizumab) scored in first-line lung cancer patients. Just a few weeks later, it was given the nod from the FDA in this key, lucrative setting.

This also came after aggressive rival Bristol-Myers Squibb saw its checkpoint inhibitor Opdivo (nivolumab) fail its key test in the same setting, handing a major win to its rival. 

Things got better when, at the start of 2017, Keytruda took another step closer to eclipsing its competitors in lung cancer after the FDA accepted its application for a new Keytruda-plus-chemo combo that could expand its market considerably. The billions spent on research Keytruda have certainly paid off.

But not everything came up roses last year for Merck, which had a high-end budget in dollar terms but was middling when it came to the budget as a percentage of revenue. As a result, the ax fell on several programs and staffers.

In September, the U.S. big pharma said it was giving up on its delayed and long-troubled bone drug odanacatib after it became apparent the safety risk from using the experimental med was just too high.

This came several years after phase 3 results had shown that while the drug could reduce fractures, it also increased the risk of atrial fibrillation and stroke. This was a blockbuster contender for the company, so its official loss in 2016 was a blow for the company and a drain on its R&D coffers.

And in the summer, Merck announced that it would be giving with one hand and taking away with the other as it confirmed cuts across its discovery and early-stage R&D businesses, but said it will also be boosting investment in two research sites.

The pharma said it would be increasing its investment in exploratory biology in Cambridge, Massachusetts, and the San Francisco Bay area. It also said, however, that there will be cuts and shifts, namely at its Kenilworth and Rahway, New Jersey, sites and the North Wales, Pennsylvania, screening facility.

RELATED: Merck to ax R&D staff while also boosting research site investment

This all comes around three years after Merck, in a $2.5 billion restructuring plan, axed 8,500 staffers, with much of the money saved up for use on research spending and deals. This went hand-in-hand with a rethink on its R&D strategy.

On the positives, Merck’s FDA fast-tracked antiviral letermovir hit its primary endpoint in a phase 3 test. That came as the partners looked to capitalize on Chimerix’s blowup after its late-stage antiviral brincidofovir flopped in 2015.

At the start of the year, Merck, which has been focusing a little more on academic and charity deals in recent years, bought into a cancer research U.K. program that targets an enzyme key to the development of cancer and blood disease. It wagered as much as $515 million on the effort, its first public partnership into epigenetics.

Quartet Medicine, at work on first-in-class treatments for pain and inflammation, also partnered up with Merck in January last year, signing a deal that could lead to a $575 million buyout agreement.

And Merck also teamed up with Moderna, the biotech of much intrigue (and funding), with $200 million upfront to help develop mRNA-based personalized cancer vaccines, as well as Keytruda combos.

Speaking of Keytruda combos, nearly every type of cancer class has been paired with the I-O drug last year, with a “throw everything at it and see what sticks” approach. That tactic is also used by its PD-1 and PD-L1 rivals BMS, Roche, AstraZeneca and Pfizer/Merck KGaA.

>> Check out Merck’s pipeline.

5. Merck