Q3 2024 Earnings Summary
- Merck's Phase III pipeline has nearly tripled over the past 3-plus years to more than 20 unique assets, fueling substantial new medicine and vaccine launches over the next 5 years, with the majority having blockbuster plus potential.
- KEYTRUDA sales grew 21% to $7.4 billion, driven by increased uptake from earlier-stage cancers and continued robust global demand.
- Strategic business development acquisitions, including a novel investigational bispecific T cell engager from Curon, and the acquisitions of EyeBio and the Elanco aqua business, are broadening and fortifying Merck's pipeline.
- Merck expects continued decline in GARDASIL shipments to China into 2025, occurring earlier than originally anticipated, which may impact overall revenue growth.
- Inventory levels of GARDASIL at their Chinese partner Zhifei remain above historical levels, indicating that recovery in demand may take longer than expected and may require increased promotional efforts.
- Management did not provide specific guidance for 2025 GARDASIL sales, reflecting uncertainty in the company's outlook in China, a critical market for GARDASIL.
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
GARDASIL in China | Discussed Q1–Q2 with a shift from bullish to acknowledging declines, citing distributor inventory issues, anti-corruption measures, and the potential male indication. | Sales around $500M with inventory declines at Zhifei. Acknowledged short-term shipment declines, but still optimistic about long-term growth potential (potential $2–3B annual revenue) and looming local 9-valent competition. | Sentiment shifted from optimism to cautious but remains positive long-term. |
Global pipeline expansion | Mentioned Q1–Q2 with plans to launch multiple new medicines and further business development. Focus on oncology leadership, vaccine advances, and HIV collaborations. | Robust R&D investments highlighted, with the Phase III pipeline tripling over three years. Emphasis on diversified assets (oncology, vaccines, immunology). | Consistently growing pipeline, viewed as a major driver of future growth. |
WINREVAIR | Introduced in Q1 (FDA approval for PAH), showed strong initial uptake in Q2 (~$70M). No mention in Q4. | Reported $149M in global sales. About 3,700 new patient prescriptions, with strong payer coverage (~60% of lives) and positive EU feedback. | Maintaining momentum; not mentioned in Q4 despite positive uptake in Q3. |
CAPVAXIVE for adults 50–64 | Q2 discussion about possible ACIP reconsideration for 50–64 age group. No direct mention Q1 or Q4. | Newly covered by ACIP expansion in Q3. Targets pneumococcal disease in adults aged 50–64, addressing ~120M in the US >50 population. Promising commercial opportunity. | New recommendation drives potential large market expansion. |
KEYTRUDA patent expiry | Discussed in Q1 (LOE from 2028 US to 2032 JP/EU) with plan to offset via diversified pipeline ; brief references in Q4 about subcutaneous version and royalty roll-off. | No mention in Q3 [no references]. | Major future impact remains; no updates in Q2/Q3. |
RSV antibody clesrovimab | Focused on in Q1–Q2 (favorable data, regulatory timeline). No mention in Q4. | Positive Phase IIb/III results and aim for 2025/2026 US launch. Phase III data show >84% reduction in RSV hospitalizations in infants. | Steady progress; regulatory filing anticipated for infant RSV prevention. |
Daiichi Sankyo collaboration charge | Q4 2023 included a $5.5B onetime charge reducing EPS, no references in Q1–Q2. | Mention of a $170M payment from Daiichi Sankyo in other income, contributing to Q3 financials. | Ongoing collaboration costs; the large Q4 charge was a onetime event. |
Operating margin improvements | Q4 highlighted a goal of >40% operating margin by 2025; no major mention in Q1–Q2. | Cited strong underlying improvements. Expected 6–7% growth while investing in pipeline. Emphasis on driving margins higher. | Continuing focus on margin expansion, reflecting long-term financial discipline. |
Foreign exchange headwinds | Discussed in Q1–Q2 and Q4, consistently noted as a ~2–3% revenue headwind and ~$0.25–$0.30 EPS impact. | ~3% negative impact on full-year revenue guide, ~$0.30 EPS headwind cited in Q3. | Persistent drag on results, offset by operational strength. |
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GARDASIL China Sales Outlook
Q: How will GARDASIL perform in China in 2025?
A: Merck expects GARDASIL sales in China to decline in 2025, projecting an opportunity of $2 billion to $3 billion annually for the next several years, including the potential male approval anticipated next year. Despite this decline, Merck remains confident in achieving its $11 billion long-term target for GARDASIL by 2030. -
2025 Growth Outlook
Q: What are the main growth drivers and headwinds for 2025?
A: Merck anticipates solid growth in 2025, driven by KEYTRUDA's expansion into earlier-stage cancers, recent and upcoming launches like WINREVAIR, CAPVAXIVE, and the anticipated launch of clesrovimab in RSV. Growth areas include early-stage non-small cell lung cancer, women's cancers (including early-stage HER2-negative breast, endometrial, and cervical cancers), and bladder cancer. Headwinds include the expiration of agreements for REMICADE and SIMPONI and expected declines in GARDASIL sales in China. Merck will provide official guidance with its fourth-quarter earnings. -
Capital Allocation and Obesity Strategy
Q: How is Merck approaching capital allocation and opportunities in obesity?
A: Merck is focused on business development across all therapeutic areas, seeking scientific opportunities that align with strategic value. In obesity, the company is targeting second and third-generation oral therapies that offer medical outcomes beyond weight loss. Merck maintains capacity for acquisitions up to $15 billion, emphasizing discipline to ensure alignment with value and strategy. -
WINREVAIR Launch and Safety
Q: What are early observations from the WINREVAIR launch regarding safety and patient uptake?
A: Since its commercial rollout, WINREVAIR has shown no significant safety issues, with strong adherence and fewer discontinuations than expected. Approximately 80% of patients are the sickest, on triple therapy. Most patients start with single vials, transitioning to double vials based on weight, with expectations aligning with the STELLAR trial where about two-thirds remain on single vials. -
CAPVAXIVE Pneumococcal Vaccine Opportunity
Q: What is the market opportunity for CAPVAXIVE with the age expansion to 50+?
A: The recent ACIP recommendation lowering vaccination age to 50 opens a significant market for CAPVAXIVE. There are approximately 120 million people over age 50 in the U.S., including 60 million aged 50-64. Merck anticipates that CAPVAXIVE's strong data, showing 85% adult protection compared to a competitor's 54% protection, will drive a majority market share over time. -
V940 in Lung Cancer Phase III Trials
Q: Why is V940 advancing to Phase III trials in lung cancer?
A: Merck is initiating a Phase III trial of V940 in lung cancer, built around the KEYNOTE-671 study, which has demonstrated overall survival benefits and received approval. The trial targets patients who do not achieve a pathological complete response after neoadjuvant or perioperative treatment, aiming to improve outcomes with V940.