MERCK lowered the top end of its full-year sales guidance after demand for its HPV vaccine fell for a second straight quarter in China.
Sales of the Gardasil shot, which is given to teenagers and young adults to prevent a virus linked to some cancers, were US$2.3 billion in the third quarter, down 11 per cent from a year ago. Aside from China, sales in most other parts of the world are growing.
“What we are seeing in the market is a slowdown of promotional activity,” both by its distribution partner in China and the local health authorities, Merck chief financial officer Caroline Litchfield said in an interview. Merck is working with its partner to increase promotional activities in the country so people know about the vaccine.
Investors were not appeased by that answer, though. Merck’s shares were down as much as 5.8 per cent after the market opened in New York, the most since late July when the company first disclosed it was having problems with Gardasil in China. The drugmaker’s shares had been on a steady climb earlier this year, but the Gardasil woes have wiped away all of those gains and then some. The stock has lost 18 per cent of its value from late July through yesterday’s close.
“Investors are again likely to focus on Gardasil in China,” BMO analyst Evan Seigerman said on Thursday (Oct 31) morning after the company reported earnings. “With another miss, questions may continue to mount on the company’s long-term guide and what can be done in the near term to mitigate any further declines.”
Merck now expects total sales of up to US$64.1 billion for the year, US$300 million less than the top end of the guidance the company provided three months ago. The company also raised the low end of its outlook, and its midpoint remains roughly the same.
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The third quarter was otherwise largely positive for Merck. Adjusted earnings per share of US$1.57 comfortably beat analyst projections for US$1.48 a share, and revenue of US$16.7 billion beat estimates by about US$200 million.
Ageing blockbuster Keytruda, which has long been a driver of earnings growth, was a standout in the period. Sales of US$7.4 billion were 17 per cent higher than the year-ago quarter. The growth was driven by increased use in early-stage lung cancer and advanced bladder cancer in the US, and strong uptake in triple-negative breast cancer abroad, Litchfield said.
Rahway, New Jersey-based Merck has spent heavily to reduce its dependence on Keytruda, which is expected to face pricing pressure later this decade.
In 2023, the company spent almost US$11 billion on Prometheus Biosciences, a maker of treatments for autoimmune disorders, and inked a cancer drug collaboration with Daiichi Sankyo worth as much as US$22 billion. That followed its US$11 billion acquisition of Acceleron Pharma in 2021.
Winrevair, a new drug that treats a rare lung disease that was acquired in the Acceleron deal, had US$149 million in sales in the third quarter. Merck expects “continued strong growth” for that drug growing forward, Litchfield said. Cancer drug Lynparza had US$337 million in sales in the period, up 13 per cent. BLOOMBERG
