Merck (MRK.US) has won FDA approval for its 21-valent pneumococcal conjugate vaccine, Capvaxive (V116), which is used to prevent invasive pneumococcal disease and pneumonia caused by pneumococcal bacteria in adults aged 18 and older.

Research shows that Capvaxive can prevent bacterial strains responsible for about 80% of pneumococcal diseases, while Pfizer's (PFE.US) 20-valent pneumococcal vaccine, Prevnar, can prevent only 50% of such strains. This means that Capvaxive could become the preferred vaccine for preventing pneumococcal disease and pose a challenge to Pfizer's leadership position in the vaccine market.

The commercial prospects of Capvaxive depend on the Centers for Disease Control and Prevention (CDC) in the US, which will decide later this month whether to recommend the Merck vaccine for adults aged 50 and older.

If Capvaxive is favored by the CDC, Merck may gain an advantage over Pfizer's Prevnar in competition. Data shows that Prevnar has a market share of almost 95%, generating over $6 billion in annual revenue for Pfizer, and people usually receive only one such vaccine in their lifetime.

Keytruda, a heavyweight cancer drug that contributes almost half of Merck's revenue, will face pricing pressure at the end of this decade. While Merck strives to boost its new product pipeline, Capvaxive complements the company's strong vaccine business. Data shows that Merck's HPV vaccine Gardasil generated nearly $9 billion in revenue for the company last year, while its pediatric pneumococcal conjugate vaccine, Vaxneuvance, approved in 2022, added $665 million in revenue to the company last year and is expected to become a product with billions in sales.

Dr. Ann Philbrick, Associate Professor at the University of Minnesota's Department of Family Medicine, said the prospect of a more effective pneumococcal vaccine is "really exciting" for healthcare providers. She said,"Pneumonia causes a lot of morbidity and mortality in older adults, and we need to take any measures we can to prevent this situation."