...Capital Deployment Supports Rating: Merck has operated with total debt/EBITDA at or below 1.7x since June 30, 2016. Common share dividends and share repurchases represented the overwhelming majority of cash outflows, while acquisitions have remained somewhat muted. However, Fitch does expect Merck to pursue targeted acquisitions over time. Merck's leverage was 1.4x at June 30, 2019, the same as June 30, 2018. Product Concentration Building: Significant sales generated from Keytruda (cancer), Jardiance/Janumet (diabetes) and Gardasil (human papilloma virus vaccine) have increased Merck's reliance on these medicines. Strong performance of newer products will be needed to mitigate the product concentration risk associated with Keytruda, Januvia/Janumet and Gardasil. Recent approvals to treat diabetes, insomnia, psoriasis and infectious diseases should augment long-term growth and diversify sources of revenue. Targeted Acquisitions Likely: Fitch looks for Merck to pursue mainly targeted acquisitions...
