Merck (MRK, Financial) has reduced its full-year sales guidance cap due to a second consecutive quarter of declining demand for its HPV vaccine in the Chinese market. In the third quarter, the Gardasil vaccine, aimed at preventing viruses linked to certain cancers, saw sales of $2.3 billion, an 11% year-over-year decrease. While global sales grew in most regions, China experienced a slowdown.
Caroline Litchfield, Merck's Chief Financial Officer, noted a slowdown in promotional activities both from Chinese distribution partners and local health departments. The company plans to collaborate with these partners to enhance awareness about the vaccine in China.
Following the financial report, Merck's stock fell nearly 2% in pre-market trading. Earlier in the year, the stock had been rising steadily until news in late July about Gardasil's underwhelming sales erased those gains. The stock has since declined 18% by Wednesday's close.
Merck now estimates total product sales for the year to reach up to $64.1 billion, $300 million lower than the guidance provided three months ago. The company also raised the lower end of its expectation range while keeping the midpoint relatively unchanged.
Merck's overall performance in the third quarter was strong. Adjusted earnings per share were $1.57, surpassing analysts' expectations of $1.48, and revenue was $16.7 billion, approximately $200 million higher than expected.
The blockbuster drug Keytruda continued to drive profit growth, with sales reaching $7.4 billion, a 17% increase from the previous year. Litchfield attributed this growth to increased use in early-stage lung cancer in the U.S. and strong usage in triple-negative breast cancer internationally.
Merck has been investing heavily to reduce reliance on Keytruda, anticipating pricing pressure later in the decade. In 2023, the company spent nearly $11 billion acquiring Prometheus Biosciences Inc., a producer of autoimmune disease treatments, and entered a cancer drug partnership with Daiichi Sankyo Co. valued at up to $22 billion. Earlier, in 2021, Merck acquired Acceleron Pharma Inc. for $11 billion.
Winrevair, a new drug obtained from the Acceleron deal for treating a rare lung disease, achieved third-quarter sales of $149 million. Litchfield indicated that Merck expects "sustained robust growth" from this drug. Lynparza, another cancer drug, reported sales of $337 million, marking a 13% increase.
