Merck's Blockbuster Vaccine Gardasil Sales In China: Analyst Highlights Challenges and Opportunities

Goldman Sachs recently discussed with Joe Romanelli, President of Human Health International at Merck & Co Inc MRK, to review Gardasil’s performance and future outlook in China.

Gardasil vaccine is indicated for girls and women 9 through 45 years to prevent cervical, vulvar, vaginal, anal, oropharyngeal, and other head and neck cancers caused by Human Papillomavirus (HPV) types.

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During its second-quarter earnings report, Merck revealed challenges in the broader Chinese vaccine market and operational issues with its partner Zhifei, which led to weaker-than-expected second-quarter sales and a more cautious growth outlook for the second half of 2024.

Gardasil’s sales revenue from China makes up about 50% of its total Gardasil sales, with the U.S. contributing around 20% and the remaining 30% coming from other international markets.

In China, Gardasil has generated approximately $15 billion in sales so far, reaching an estimated 30-40% of the 200 million target population of females aged 9-45 who can afford the vaccine. The goal is to achieve 90% penetration in this demographic.

Merck reported a marginal increase of 1% in Gardasil sales to $2.48 billion in the second quarter of 2024. Lower sales in China largely offset growth.

Merck’s global efforts, especially in China over the past 7-8 years, have positioned the company to meet the growing demand for HPV vaccinations. This supports Merck’s confidence in achieving over $11 billion in Gardasil sales by 2030.

In the near term, Goldman Sachs remains cautiously optimistic about the potential for key players in China’s vaccine market. Despite limited third-party data to reassure investors, the analyst sees positive signs.

The analyst says it is reassured by Merck’s confidence in their plans to improve commercial execution with Zhifei and their ability to navigate evolving competitive dynamics through scientific and tactical innovations.

“Overall, we came away from our conversation, net

positive, relative to initial concerns,” Goldman Sachs added. Goldman Sachs reiterates the Buy rating on Merck.

Price Action: MRK stock is down 2.20% at $112.66 at last check Monday.

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