Merck & Co., Inc. (NYSE:MRK) has announced that it will be writing down approximately $2.9 billion following the shrinking of the market for a hepatitis drug it owns. The drug, uprifosbuvir, joined Merck’s portfolio after one of the largest drug makers in the United States acquired Idenix Pharmaceuticals for $2.9 billion in 2014. According to Merck, the value of the hepatitis C drug which is still undergoing clinical trials is now $240 million.

Myriad new treatments

Part of the reason Merck had to take the charge is the fact that there have been other successful new treatments which have consequently shrunk the market that Merck anticipated. Another reason that has shrunk the market is the fact that there are a reduced number of treatable patients as major scientific breakthroughs have ensured that there are now more cures that work fast and which are also highly effective.

Merck is not the only drugmaker experiencing dwindling fortunes in hepatitis C treatments as Gilead Sciences, Inc. (NASDAQ:GILD) had earlier in the month issued lower sales projections for its drugs in 2017. The drug maker attributed the shrinking market to there being a reduced number of people requiring treatment.

“They are either seeing that the value of the hepatitis C market, when they are able to launch their product, isn’t worth the further investment, or they are seeing safety or efficacy signals that doesn’t make this as compelling,” argued a Bloomberg Intelligence analyst, Asthika Goonewardene.

Trials to continue

Some of the hepatitis C drugs that are crowding the market are manufactured by AbbVie Inc (NYSE:ABBV). Merck also has a different drug called Zepatier which got the approval of the FDA last year.

Despite the writedown, Merck said it was pushing ahead with the uprifosbuvir trials. The writedown forced Merck to reduced earnings for quarter four to $0.22 loss against an earlier project profit of $0.42. Merck will, however, take consolation in the fact that the Idenix acquisition added to its intellectual property assets. This saw it awarded $2.54 billion in a patent infringement case against Gilead Sciences last year.

In Thursday’s trading session, Merck & Co Inc edged up by 0.86% to close the day at $65.85 a share.