$Merck & Co (MRK.US)$ Lowered the upper limit of the full-year sales guidance, as the demand for its HPV vaccine in the Chinese market has declined for the second consecutive quarter.
In the third quarter, sales of the Gardasil vaccine (a vaccine administered to adolescents and young adults to prevent virus-related cancers) amounted to $2.3 billion, a year-on-year decrease of 11%. Apart from the Chinese market, sales of this vaccine in most other regions globally have been increasing.
Merck's Chief Financial Officer Caroline Litchfield stated in an interview, "What we are seeing in the market is a slowdown in promotional activities", both in China's distribution partners and local health departments. Merck is collaborating with its partners to increase promotional activities in the Chinese market to raise awareness about this vaccine.
Earlier this year, the pharmaceutical company's stock price had been steadily climbing, but the news in late July that sales of the Gardasil vaccine fell short of expectations erased all of those gains. Since then, as of the close of trading on Wednesday, the stock has fallen by a cumulative 18%.
Merck currently estimates that total product sales for the year could reach up to $64.1 billion, which is $0.3 billion lower than the upper limit provided by the company three months ago. The company has also raised the lower end of its expected range, while the midpoint remains essentially unchanged.
In terms of performance in the third quarter, Merck performed well overall. Adjusted earnings per share were $1.57, easily exceeding analysts' expectations of $1.48, with revenue of $16.7 billion, approximately $0.2 billion higher than expected.
Keytruda, a heavyweight drug that has been a driving force for profit growth for a long time, performed outstandingly during this period. Sales were $7.4 billion, a 17% increase from the same period last year. Litchfield stated that this growth was driven by increased usage in early and late-stage lung cancer in the usa, as well as strong usage of triple-negative breast cancer abroad.
Due to the expected pricing pressure on Keytruda later in this decade, merck has invested heavily to reduce its dependence on Keytruda.
In 2023, the company spent nearly $11 billion to acquire the autoimmune disease treatment drug manufacturer, Prometheus Biosciences Inc., and signed a cancer drug collaboration agreement worth as much as $22 billion with Daiichi Sankyo Co. Even earlier, the company spent $11 billion in 2021 to acquire Acceleron Pharma Inc.
The new drug, Winrevair, acquired in the Acceleron deal, is a treatment for rare lung diseases, with sales of $0.149 billion in the third quarter. Litchfield stated that merck expects the drug to continue to experience 'strong growth.' Sales of the cancer drug Lynparza during the same period were $0.337 billion, a 13% increase.