In this article, Merck issued full-year 2025 revenue guidance on Tuesday that was below Wall Street’s expectations due to a temporary pause in shipments of a key vaccine to China. The company’s shares dropped by 11% in response to this news.
Merck forecasts 2025 sales to range between $64.1 billion and $65.6 billion, falling short of the $67.31 billion expected by analysts surveyed by LSEG. The company attributed this sales range to the decision to halt Gardasil shipments to China from February through at least mid-2025.
Gardasil is a vaccine that prevents cancer caused by HPV, a common sexually transmitted infection in the U.S. Investors have been concerned about the vaccine’s sales in China, which accounts for a significant portion of its international revenue.
The lower end of Merck’s revenue guidance assumes no further shipments to China, with sales projected to be less than $1 billion at the higher end. Merck’s CEO, Robert Davis, mentioned on an earnings call that Gardasil inventory in China remains high, impacting demand due to factors like softer consumer spending.
The company aims to reduce excess inventory through the shipping pause, supporting its commercialization partner in China, Zhifei. Merck hopes that this pause will help normalize the market dynamics for Gardasil, allowing for the absorption of Zhifei’s inventory by underlying demand.
Merck withdrew its $11 billion annual sales target for Gardasil due to uncertainties surrounding China’s economic recovery. However, the company believes there is still a path to achieving that revenue goal. Gardasil’s sales are crucial for Merck to offset losses from its leading cancer therapy, Keytruda, which will lose exclusivity in 2028.
Merck expects adjusted earnings per share for the full year to be between $8.88 and $9.03, aligning with analysts’ expectations. The company’s outlook includes a charge of approximately 9 cents per share related to its license agreement with LaNova.
In the fourth quarter of 2024, Merck surpassed expectations with sales of Keytruda, other oncology medicines, and a newly launched cardiovascular treatment. The company reported a net income of $3.74 billion, or $1.48 per share, for the quarter, compared to a net loss of $1.23 billion, or 48 cents per share, in the same period the previous year.
Merck’s revenue for the quarter reached $15.62 billion, a 7% increase from the previous year. The pharmaceutical unit generated $14.04 billion in revenue, up 7% from the same period a year ago. Keytruda sales totaled $7.84 billion, a 19% increase from the previous year, driven by higher adoption for various cancer types.
Gardasil sales amounted to $1.55 billion, down 17% from the fourth quarter of 2023. Januvia, Merck’s Type 2 diabetes treatment, saw sales decline to $487 million, a 38% drop from the previous year, attributed to lower pricing in the U.S. and competition from generic drugs.
Merck’s animal health division reported nearly $1.4 billion in sales, a 9% increase from the same period a year ago, driven by higher pricing across its product portfolio.
