Merck & Co Inc (MRK) kicked off its third quarter with a strong performance, exceeding analysts’ expectations with sales reaching $16.66 billion, a 4% increase compared to the same period last year. This success comes despite facing challenges in the Gardasil market, a vaccine that protects against cancer caused by HPV.
While Gardasil sales dipped by 11% to $2.31 billion, attributed to lower demand in China, the US market saw a boost in sales driven by public sector purchasing patterns, higher pricing, and increased demand. This positive trend also extended to most international regions.
However, the spotlight remained on Merck’s other key franchises, particularly the impressive performance of Keytruda, its flagship cancer immunotherapy. Keytruda generated $7.43 billion in revenue during the quarter, marking a significant 17% increase year-over-year. Adding to the optimism, Merck’s newly approved Winrevair (sotatercept) for adults with pulmonary arterial hypertension generated a promising $149 million in sales.
Despite the challenges posed by the declining Gardasil sales in China, analysts remain optimistic about Merck’s future. Goldman Sachs maintains a ‘Buy’ rating for Merck stock, although they have adjusted their price target from $139 to $135, reflecting a lowered projection for Gardasil sales. BMO Capital Markets acknowledges the potential challenges in the Chinese market, suggesting that Gardasil sales could remain subdued until 2025. However, they remain confident in Merck’s overall performance, particularly with the continued strong performance of Winrevair and the promise of upcoming trials for ZENITH and CADENCE.
Despite the recent dip in Gardasil sales, Merck’s Q3 results highlight the company’s strength and potential for continued growth. The success of Keytruda and the emergence of Winrevair, combined with the ongoing development of promising new products, bode well for Merck’s future.
