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Merck [NYSE:MRK] is looking hard for potential licensing or acquisition opportunities in the areas of immunology, metabolism and ophthalmology, according to Ben Thorner, who is on the business development leadership team at Merck.

Thorner said Merck, the 7th largest global drug company by 2017 revenue, is also closely looking at areas of Alzheimer’s and neurodegeneration as possible areas for expansion, he said in an interview. Thorner, cautioned, though, that the company is “pretty agnostic” when it comes to sizing up therapeutics areas and that these are just some of the many disease spaces that the company is eyeing to potentially bolster its portfolio.

“Our approach is to try and look across all the areas of scientific endeavor and to try and find the molecules where the mechanism of action is pretty well understood,” he explained.

Thorner is the senior vice president and head of business development and licensing at Merck Research Laboratories.

Kenilworth, New Jersey-based Merck, which had USD 6bn in cash on its balance sheet as of December 2017, needs to expand its portfolio in the face of what analysts say is over-reliance on two of its core products.

One of its primary revenue drivers, the diabetes drug Januvia, faces US and EU patent expiration in 2022. Januvia and Merck’s blockbuster immuno-oncology agent Keytruda together accounted for nearly 30 percent of the drugmaker’s USD 35bn total pharmaceutical sales in 2017.

A number of other drugs in Merck’s currently marketed portfolio also face challenges. Its hepatitis-C drug Zepatier has found a niche in a crowded category, but the patient population for that disease continues to shrink. Research firm GlobalData has estimated that the hepatitis-C market will decline from USD 21.7bn in 2015 to USD 17.5bn by 2025 as new drugs made by Gilead Sciences [NASDAQ:GILD] and AbbVie[NYSE:ABBV] can cure the disease in large numbers of patients, an industry success story.

Three of its other major products, autoimmune drug Remicade, and cholesterol treatments Vytorin and Zetia are all off patent and face competition from biosimilars and generics, respectively. Its shingles vaccine Zostavax will soon face new competition from GlaxoSmithKline’s [NYSE:GSK] Shingrix that was approved by the FDA in October.

“It’s clear that Merck needs to pull the next Keytruda out of its hat,” one investor said, noting that “they’re clearly going to have to do something in the next five-year period and will likely have to do a multitude of things.”

Merck has not been shy about making relatively small tuck in acquisitions. This year, for instance, it purchased Viralytics, a privately held Australian company for USD 394m and struck a strategy oncology collaboration with Eisai worth up to USD 5.76bn.

But while Thornier said Merck “looks broadly at business development”, the company has been relatively reticent about making big deals, such as its USD 8.4bn purchase of Cubist Pharmaceuticals and the USD 3.85bn purchase of Idenix Pharmaceuticals, both in 2014.

Credit Suisse analyst Vamil Divan wrote in an investor note in March that it would “strongly favor” Merck boosting its mid-to-late stage pipeline by bringing in additional growth drivers for the company outside of its Keytruda oncology franchise.

An industry banker, too, acknowledged that it would be prudent for Merck to diversify its portfolio at this time, in particular in oncology with Keytruda. “You’re one bad adverse event from really disrupting that franchise,” the banker said.

To that point, in 2016 Bristol-Myers Squibb [NYSE:BMY] had an early lead in the IO market, securing the first approval in second-line lung cancer with Opdivo and with a read out in the frontline setting coming in August — months ahead of competitor Keytruda. Opdivo was ultimately found to not be effective as a standalone therapy in that pivotal clinical trial, conceding its lead to Merck as a result.

Les Funtleyder, healthcare portfolio manager at E Squared Capital Management, said that Merck “has to make a decision on capital allocation, a lot of assets are very expensive,” he noted, pointing to high valuations in the biotech sector.

As to how Merck should do that, Funtleyder said that “the key for all the larger players is that they have to develop therapeutic areas of scale. Merck could in theory buy a couple USD 100m products, but I don’t think it would justify their time.”

Thorner maintained that the company is looking broadly “to identify the next Keytruda, the next Januvia. They may not be in the cancer or diabetes space,” or in any area currently represented in its portfolio.

Still, he underscored the importance of building the company’s portfolio through business development, saying that more than half of its pipeline comes from external efforts.

“Going forward that is going to be a staple our business,” said Thornier. “It really underlines the importance of partnerships whether they be licensing or option deals or M&A.”

Merck shares have fallen 15.63 per cent since this time last year, underperforming the SPDR S&P Pharmaceuticals ETF that fell 2 per cent over the same period.

Merck traded at USD 53.55 per share on Tuesday, giving the company a market cap of USD 146.8 bn.