USA – Merck & Co. has announced its third-quarter earnings, exceeding expectations driven by robust sales of its leading cancer drug, Keytruda, and other new treatments.
However, the company faced challenges with its HPV vaccine, Gardasil, as sales dipped significantly compared to last year.
On Thursday, Merck reported third-quarter revenues of US $16.66 billion, a 4% increase year-over-year, surpassing analyst forecasts of US $16.46 billion.
Adjusted earnings per share stood at US $1.57, beating expectations of US $1.50. Net income for the quarter was US $3.16 billion, or US $1.24 per share, down from US $4.75 billion, or US $1.86 per share, in the same period last year.
Despite the positive overall performance, Merck has narrowed its full-year sales outlook to a range of US $63.6 billion to US $64.1 billion, down slightly from earlier projections.
The company also revised its adjusted profit guidance, reducing it to US $7.72 to US $7.77 per share, reflecting a 24-cent per share one-time charge related to business development agreements.
Challenges with Gardasil sales
Merck’s HPV vaccine, Gardasil, experienced an 11% drop in sales, generating US $2.31 billion for the quarter, falling short of analysts’ expectations of US $2.51 billion.
The decline was primarily attributed to reduced demand in China, although there was a rise in sales in the U.S.
CEO Robert Davis emphasized the company’s commitment to improving the vaccine’s market presence, stating, “We’re going to make progress, we are making progress, but it’s going to take some time.”
The Gardasil vaccine is critical for preventing HPV, which is the most common sexually transmitted infection in the U.S.
Despite the recent dip, Davis remains optimistic about the long-term potential, asserting that “less than 10% of the eligible population worldwide is vaccinated,” and they aim to achieve over US $11 billion in sales by 2030.
Keytruda continues to drive growth
Merck’s cancer immunotherapy, Keytruda, remains a standout performer, with sales reaching US $7.43 billion in Q3, reflecting a 17% increase from the previous year.
The growth is largely attributed to the drug’s use in treating earlier-stage cancers and its continued demand for metastatic cases.
The pharmaceutical division reported a total revenue of US $14.94 billion, marking a 5% increase year-over-year, significantly buoyed by Keytruda’s strong performance.
Additionally,Merck is strategically positioning itself for future growth as it prepares for the 2028 patent expiration of Keytruda.
The company recently launched Winrevair, a treatment for a severe lung condition, generating US $149 million in revenue following its approval in March, surpassing analyst expectations.
Additionally, Merck’s new pneumococcal vaccine, Capvaxive, recently received expanded approval from the CDC for use in adults aged 50 and older.
This vaccine presents a significant opportunity as approximately 120 million people in the U.S. fall into this age category, with projections suggesting it could capture an additional US $700 million in revenue by 2026.
Looking forward, Merck is focused on advancing its late-stage development pipeline, which has nearly tripled in size to over 20 unique products in the last three years.
CEO Rob Davis highlighted this momentum, stating, “This will fuel a significant number of medicine and vaccine launches over the next five years, the majority of which will have ‘blockbuster-plus potential.’”
In 2023, Merck acquired Prometheus Biosciences Inc. for nearly US $11 billion and formed a cancer drug collaboration with Daiichi Sankyo Co. valued at up to US $22 billion, following its US $11 billion purchase of Acceleron Pharma Inc. in 2021.
To drive new growth, Merck is actively seeking deals across various therapeutic areas, particularly for next-generation obesity treatments, focusing on transactions between US $1 billion and US $15 billion.
In the third quarter, sales for Winrevair, a drug acquired from the Acceleron deal for treating a rare lung disease, reached US $149 million, with Merck anticipating “continued strong growth” for this medication.
Additionally, cancer drug Lynparza generated US $337 million in sales during the period, marking a 13% increase.
