Merck's Gardasil Vaccine Slowdown In China Bites Again, Stock Falls On Weak 2025 Outlook

On Tuesday, Merck & Co Inc MRK reported fourth-quarter sales of $15.62 billion, up 7% year over year and slightly beating the consensus estimate of $15.49 billion. Excluding the impact of foreign exchange, sales increased 9%.

Merck reported adjusted EPS of $1.72, up from $0.03 a year ago and beating the consensus of $1.62. Lower charges for business development transactions and operational strength primarily drove the increase.

"We delivered strong growth in 2024, reflecting demand for our innovative portfolio, including for KEYTRUDA, which continues to benefit more patients with cancer globally, the successful launch of WINREVAIR and strong performance of our Animal Health business," said Robert Davis, chairman and chief executive officer, Merck.

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The pharmaceutical unit booked $14.04 billion in revenue, up 7% year over year (+8% ex-exchange). The increase is driven by growth in oncology and cardiovascular, partially offset by declines in diabetes, vaccines, immunology, and virology.

Merck's blockbuster cancer immunotherapy Keytruda generated $7.84 billion in revenue during the quarter, up 19% from the year-earlier period.

Merck reported a decline of 17% in sales of Gardasil to $1.55 billion, a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S., primarily due to lower demand in China, partially offset by higher demand in most international regions, particularly in Japan.

In the third quarter, Merck reported a decline of 11% in Gardasil sales to $2.31 billion. The newly approved Winrevair (sotatercept) for adults with pulmonary arterial hypertension generated sales of $200 million.

Guidance: Merck expects fiscal year 2025 sales of $64.1 billion-$65.6 billion versus a consensus of $67.31 billion, including a negative impact of foreign exchange of approximately 2% at mid-January 2025 exchange rates.

The sales range reflects a decision to temporarily pause Gardasil/Gardasil 9 shipments into China beginning February 2025 through at least mid-year.

The U.S. pharma giant expects adjusted EPS Of $8.88-$9.03 versus a consensus of $9.02. The guidance includes an expected one-time charge of $300 million, or approximately $0.09 per share, related to a milestone payment to LaNova, which will be recognized upon completion of the technology transfer for MK-2010.

Price Action: MRK stock is down 7.81% at $92.01 premarket at the last check on Tuesday.

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Image via Merck