Merck beats earnings expectations, raises outlook on strong Keytruda and vaccine sales

Merck
on
Thursday
reported
first-quarter
revenue
and
adjusted
earnings
that
topped
expectations
as
it
posted
strong
sales
of
its
blockbuster
cancer
drug

Keytruda
and

vaccine
products.

The
pharmaceutical
giant
also
raised
and
narrowed
its
full-year
revenue
and
adjusted
earnings
forecasts.
Merck
now
expects
2024
sales
to
come
in
between
$63.1
billion
and
$64.3
billion,
up
from
previous
guidance
of
$62.7
to
$64.2
billion. 

The
company
expects
full-year
adjusted
earnings
of
$8.53
to
$8.65
per
share,
up
from
its
prior
forecast
of
$8.44
to
$8.59
per
share. 

That
outlook
includes
a
one-time
charge
of
roughly
26
cents
per
share
related
to
Merck’s

acquisition
of
Harpoon
Therapeutics
in
January.
The
company
develops
immune-based
cancer
drugs.
The
guidance
also
includes
a
negative
impact
of
30
cents
per
share
from
foreign
exchange
changes. 

Here
is
what
Merck
reported
for
the
first
quarter
compared
with
what
Wall
Street
was
expecting,
based
on
a
survey
of
analysts
by
LSEG: 

• 
  Earnings
  per
  share:
  $2.07
  adjusted
  vs.
  $1.88
  expected
• 
  Revenue:
  $15.78
  billion
  vs.
  $15.20
  billion
  expected

The
company
posted
a
net
income
of
$4.76
billion,
or
$1.87
per
share,
for
the
first
quarter.
That
compares
with
a
net
income
of
$2.82
billion,
or
$1.11
per
share,
during
the
year-earlier
period. 

Excluding
acquisition
and
restructuring
costs,
Merck
earned
$2.07
per
share
for
the
first
quarter.
Both
adjusted
and
nonadjusted
profit
for
the
period
include
the
charge
related
to
the
Harpoon
deal.

Merck
raked
in
$15.78
billion
in
revenue
for
the
quarter,
up
9%
from
the
same
period
a
year
ago. 

Those
results
come
as
Merck
shows
substantial
progress
in
preparing
for
Keytruda’s

patent
expiration
in
2028.
The
loss
of
exclusive
rights
to
the
drug
will
likely
cause
sales
to
fall,
forcing
the
company
to
draw
revenue
from
elsewhere.

But
Merck
has
a
handful
of
new
deals
under
its
belt
and
key
drug
launches
that
will
help
it
offset
those
losses.
That
includes
Winrevair,
a
medication

approved
in
the
U.S.
last
month
to
treat
a
progressive
and
life-threatening
lung
condition.
Some
analysts
expect
that
worldwide
sales
of
Winrevair
could
reach
$5
billion
by
2030. 

Merck
is
also
cutting
costs
under
a
new
restructuring
program
it
announced
in
February.
Those
efforts
aim
to
improve
the
manufacturing
network
of
both
its
pharmaceutical
division
and
animal
health
business. 

The
company
recorded
charges
of
$246
million
related
to
restructuring
in
the
first
quarter,
which
are
excluded
from
its
adjusted
results. 

Merck’s
pharmaceutical
unit
booked
$14.01
billion
in
revenue
during
the
first
quarter,
up
10%
from
the
same
period
a
year
ago.
That
division
develops
a
wide
range
of
drugs
for
several
disease
areas,
including
oncology
and
infectious
diseases. 

Merck’s
immunotherapy
Keytruda,
which
is
used
to
treat
several
types
of
cancer,
largely
drove
the
growth.
Keytruda
generated
$6.95
billion
in
revenue
during
the
quarter,
up
20%
from
the
year-earlier
period. 

Analysts
had
been
expecting
$6.71
billion
in
Keytruda
sales,
according
to
estimates
from
FactSet. 

Merck
also
reported
a
jump
in
sales
of
Gardasil,
a
vaccine
that
prevents
cancer
from
HPV,
the
most
common
sexually
transmitted
infection
in
the
U.S.

Gardasil
brought
in
$2.25
billion
in
sales,
up
14%
from
the
first
quarter
of
2023.
That
is
in
line
with
the
$2.24
billion
that
analysts
expected,
FactSet
estimates
said. 

Another
vaccine
called

Vaxneuvance,
which
prevents
patients
from
getting
sick
with
pneumococcal
disease,
also
posted
strong
growth
during
the
quarter.
The
shot
recorded
$219
million
in
sales,
up
106%
from
the
year-earlier
period. 

Meanwhile,
Merck’s
Type
2
diabetes
treatment
Januvia
drew
$670
million
in
sales,
down
24%
from
the
same
period
a
year
ago.
The
company
said
the
decline
was
primarily
due
to
lower
prices
of
the
drug,
falling
demand
in
the
U.S.
and
generic
competition
in
several
international
markets.

Analysts
had
expected
Januvia
sales
of
$687.3
million,
according
to
FactSet
estimates.

Januvia
is
one
of
10
drugs
targeted
in
ongoing
Medicare
drug
price
negotiations,
a
policy
under
the
Inflation
Reduction
Act
that
aims
to
make
costly
medications
more
affordable
for
seniors.

Sales
of
Merck’s
Covid
antiviral
pill
Lagevrio
also
fell
11%
to
$350
million
during
the
quarter.
Still,
that
total
blew
past
analysts’
expectations
of
$106.4
million
in
sales,
according
to
FactSet. 

Demand
for
Lagevrio
and
other
Covid
products
from
companies
such
as


Pfizer
and


Moderna
has
plunged
over
the
past
year,
as
cases
and
public
concern
about
the
virus
dwindled
from
their
pandemic
peaks.

Merck’s
animal
health
division,
which
develops
vaccines
and
medicines
for
dogs,
cats
and
cattle,
posted
$1.51
billion
in
sales
for
the
first
quarter.
That
is
up
only
1%
from
the
same
period
a
year
ago. 

In
February,
Merck
said
it
would
buy


Elanco
Animal
Health‘s
aquatic
business
for

$1.3
billion
in
cash.
The
deal
includes
Elanco’s
entire
portfolio
of
medicines,
vaccines
and
supplements
for
aquatic
species,
along
with
two
manufacturing
plants
and
a
research
facility.