(MENAFN- Live Mint) Merck & Co. lowered the top end of its full-year sales forecast 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 $2.3 billion in the third quarter, down 11% from a year ago. Aside from China, sales in most other parts of the world are growing.
“This isn't going to be solved next quarter. It is going to take us through probably 2025,” to address the issue, Merck Chief Executive Officer Rob Davis said Thursday on a call with analysts. This quarter's sales of the vaccine will probably be near those of the third quarter, about $500 million, he said.
The vaccine is only approved in China for females and Merck had anticipated that sales among them would slow. However, annual sales in the country are expected to reach as much as $3 billion in coming years, pending a potential approval in males next year.
Share Woes
Investors weren't appeased by those answers, though. Merck's shares fell as much as 5.9% as of 11:37 a.m. in New York, the most intraday since late July when the company first disclosed problems with the shot's China sales.
The drugmaker's shares were on a steady climb earlier this year, but Gardasil's woes have wiped away those gains and then some. The stock lost 18% of its value from late July through yesterday's close.
Merck now expects total sales of up to $64.1 billion for the year, $300 million less than the top end of the guidance it provided three months ago. The company also raised the low end of its outlook, and its midpoint remains roughly the same.
The third quarter was otherwise largely positive for Merck. Adjusted earnings of $1.57 a share comfortably beat analysts' projections for $1.48. Revenue of $16.7 billion also beat estimates.
Aging blockbuster Keytruda, which has long been a driver of earnings growth, was a standout in the period. Sales of $7.4 billion were 17% 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, Merck's Chief Financial Officer Caroline Litchfield said in an interview.
Keytruda Dependence
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 paid almost $11 billion for Prometheus Biosciences Inc., a maker of treatments for autoimmune disorders, and inked a cancer drug collaboration with Daiichi Sankyo Co. worth as much as $22 billion. That followed its $11 billion acquisition of Acceleron Pharma Inc. in 2021.
To come up with new sources of growth, Merck is also hunting for deals in all therapeutic areas, Davis said on the call with analysts. That includes potential next generation medicines for obesity, he said. The company is primarily focused on transactions in the $1 billion to $15 billion range.
Winrevair, a new drug acquired in the Acceleron deal that treats a rare lung disease, had $149 million in sales in the third quarter. Merck expects“continued strong growth” for that drug going forward, Litchfield said. Cancer drug Lynparza had $337 million in sales in the period, up 13%.
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