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Merck on Tuesday issued full-year 2025 revenue guidance that fell short of Wall Street’s expectations, as the company temporarily paused shipments of a key vaccine into China.
Shares of Merck fell 10% on Tuesday.
The pharmaceutical giant anticipates 2025 sales of $64.1 billion to $65.6 billion, lower than the $67.31 billion that analysts surveyed by LSEG had expected. In a release, the company said that sales range reflects a decision to halt shipments of Gardasil into China beginning in February and going through at least mid-2025.
Gardasil is a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S. Investors have been unsettled over the past year by trouble with sales of that blockbuster shot in China, as the country makes up the majority of the product’s international revenue.
The low end of Merck’s revenue guidance assumes no further shipments in China, and less than $1 billion in sales at the high end.
Merck CEO Robert Davis said on an earnings call that Gardasil inventory “remains elevated at above normal levels,” noting that demand for the shot has not recovered to the level the company expected due to factors such as softer consumer spending. The shipping pause will allow for a “more rapid reduction of excess inventory” and help support the financial position of its commercialization partner in China, Zhifei.
Sales of the shot will likely be critical to Merck’s efforts to offset losses from its top-selling cancer therapy Keytruda, which will lose exclusivity in 2028. Merck is hoping that Gardasil’s expanded approval for men ages 9 to 26 in China will eventually help boost uptake of the shot.
“We believe China still represents a significant long-term opportunity for Gardasil given the large number of females, and now males with our recent approval, that are not yet immunized, and we remain both committed and well-positioned to maximize this potential for the long-term,” Davis said.
Merck expects full-year adjusted earnings of $8.88 to $9.03 per share, which is generally in line with what analysts were expecting. The outlook reflects a charge of roughly 9 cents per share related to Merck’s license agreement with privately held drugmaker LaNova.
Sales of Keytruda, other oncology medicines and the company’s recently launched cardiovascular treatment helped Merck beat expectations for the fourth quarter of 2024.
Here’s what Merck reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $1.72 adjusted vs. $1.62 expected
- Revenue: $15.62 billion vs. $15.49 billion expected
The company posted net income of $3.74 billion, or $1.48 per share, for the quarter. That compares with a net loss of $1.23 billion, or 48 cents per share, during the year-earlier period.
Excluding acquisition and restructuring costs, Merck earned $1.72 per share for the fourth quarter. Both adjusted and nonadjusted earnings reflect a charge of 23 cents per share related to Merck’s recent licensing agreements, including a deal to develop an experimental obesity pill from a Chinese drugmaker.
Merck raked in $15.62 billion in revenue for the quarter, up 7% from the same period a year ago.
Pharmaceutical division
Merck’s pharmaceutical unit, which develops a wide range of drugs, booked $14.04 billion in revenue during the fourth quarter. That’s up 7% from the same period a year ago.
Keytruda recorded $7.84 billion in revenue during the quarter, up 19% from the year-earlier period. Analysts had expected sales of $7.63 billion, according to StreetAccount estimates.
That increase was driven by higher uptake of Keytruda for earlier-stage cancers and strong demand for the drug for metastatic cancers, which spread to other parts of the body.
Gardasil raked in $1.55 billion in sales, down 17% from the fourth quarter of 2023. That’s slightly below the $1.58 billion that analysts were expecting, according to StreetAccount estimates.
Merck’s Type 2 diabetes treatment, Januvia, also saw sales fall to $487 million during the quarter, down 38% from the same period a year ago. The company said the decline was primarily due to lower pricing in the U.S., supply constraints in China and ongoing competition from cheaper generic drugs in international markets.
That came below analysts’ estimate of $500 million for the period, according to StreetAccount.
Januvia is one of 10 drugs that was subject to Medicare drug price negotiations, a policy under the Inflation Reduction Act that aims to make costly medications more affordable for older Americans. New negotiated prices for that first round of drugs go into effect in 2026.
Merck’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted nearly $1.4 billion in sales, up 9% from the same period a year ago. The company said higher pricing for products across the portfolio drove that increase.
