Merck Q2 earnings propelled by Keytruda, Gardasil sales, but company couches further sales growth expectations

Merck touted billion-dollar sales growth for its cancer drug Keytruda and HPV vaccine Gardasil this quarter, and has high expectations for both as regulatory bodies have expanded indications. Yet the company couched further expectations for Gardasil, noting “slower” growth for the rest of 2023.

Keytruda sales jumped 19% to $6.3 billion because of global sales momentum in metastatic cancers and in early-stage disease such as in neoadjuvant/adjuvant triple-negative breast cancer in the US. Further, sales for Gardasil soared 47% to $47 billion owing to global demand specifically in China, according to its quarterly earnings report.

Caroline Litchfield

However, Merck CFO Caroline Litchfield noted on an investor call this morning that Gardasil growth is expected to slow down because the company expects shipments to China to be less than they were in the first half of 2023.

“Performance was driven by strong global demand, especially in China, where we are benefiting from the expanded indication of Gardasil 9 for girls and women 9 to 45 years of age,” Litchfield added.

As for Keytruda, it drew $3.9 billion in sales in the US alone, a growth of 21%. That growth was thanks in part to higher wholesaler buy-in this quarter compared to the same time in 2022.

“One of the distributors who has bought in has indicated that they expect to buy out in the third quarter and the quantum of that buyout has been indicated to be $150 million,” Litchfield noted. “That said, we continue to expect strong growth from Keytruda given the current indications we have as well as new launches to come.”

Merck’s total worldwide sales were $15 million — an increase of just 3% from the second quarter of 2022. Overall, Merck added that it expects demand for oncology drugs and vaccines, expecting full-year sales to be between $58.6 billion and $59.6 billion.

Declines in Covid-19 antiviral, type 2 diabetes drugs

Meanwhile, sales for Merck’s Covid-19 antiviral Lagevrio continue to decline, somewhat tainting the Big Pharma’s second quarter growth this year. Lagevrio sales are down 83% to just $203 million from $1.1 billion at this time last year.

But excluding lagging sales of Lagevrio, the company reported growth of 11%. For the full year, Merck still expects about $1 billion worth of Lagevrio sales compared to $5.7 billion of Lagevrio sales in 2022, as per its earnings report. 

Lagevrio sales have been on a downward trend, dropping also in the first quarter of 2023: sales were at $392 million last quarter, a decline of 88% from the same time in 2022.

Lagevrio has been competing with Pfizer’s more successful antiviral Paxlovid and making its case against a rejection by the European Medicines Agency earlier this year. The EMA decided that based on the data, the agency couldn’t say for sure that Lagevrio reduced the risk of hospitalization or death, shortened the duration of illness or time to recovery, or identified a specific group of patients who saw a clinically relevant benefit from the drug.

According to the company, the decrease in Lagevrio has been led by “non-recurrence” of sales in the UK and lower sales in Japan. Last year, a preprint of a real world study of Lagevrio conducted in the UK found that the antiviral does not reduce “already low” numbers of hospitalizations or deaths in mostly vaccinated adults.

Merck also saw a major decline in its diabetes portfolio due to lower sales of its type 2 diabetes drugs Januvia and Janumet, a 30% dip compared to this time in 2022. It’s down to $864 million in Januvia and Janumet sales this quarter, compared with $880 million last quarter and $1.2 billion in the second quarter of 2022. The drop can be attributed to generics competition, especially in Europe, and lower demand and pricing in the US, according to Merck.

Merck still holds patent power over the drugs’ formulation through May 2027. Last year, a federal judge ruled in favor of Merck and against Viatris in a patent battle related to the dihydrogen phosphate salt of sitagliptin — an active ingredient in the blockbuster diabetes drugs Januvia, Janumet and extended-release formulation Janumet X.

Editor’s note: This article was updated to add current and further sales expectations for Merck’s Keytruda and Gardasil.

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