(Bloomberg) -- Merck & Co. beat Wall Street’s profit and sales estimates for the quarter as the blockbuster immunotherapy Keytruda continued to dominate the market for cancer medicines.
Adjusted earnings were US$2.28 a share in the second quarter, the company said in a statement Tuesday, outpacing analysts’ average estimate by 11 cents. Revenue also beat estimates, as sales of Keytruda increased 16 per cent to $7.3 billion.
The company lowered its 2024 profit outlook on acquisition costs and said sales of the HPV vaccine Gardasil missed Wall Street projections.
The stock dropped 4.7 per cent in New York. It had risen 17 per cent this year through Monday’s close, outperforming most of its US pharmaceutical peers and the S&P 500 Index.
Merck has spent billions to find new sources of growth as Keytruda, approved for many types of cancer, will face pricing pressure later this decade. Last year, the company spent nearly $11 billion on Prometheus Biosciences Inc., maker of treatments for autoimmune disorders, and signed a deal with Daiichi Sankyo Co. worth as much as $22 billion to collaborate on novel cancer medicines.
Gardasil, a widely used vaccine to prevent the cancer-linked human papillomavirus, is key product for Merck’s future.
The company said sales of the shot in China could fall below expectations this year due to an issue with a third-party distributor. A slowing in one of the most populous countries in the world could call into question the more optimistic long-term sales targets, said John Murphy, a Bloomberg Intelligence analyst, in an email.
Merck increased its full-year revenue forecast by $200 million at the median, to between $63.4 billion and $64.4 billion. Its next big product is expected to come in the form of Winrevair, a treatment for a rare form of high blood pressure approved in March. The drug, acquired in Merck’s $11 billion buyout of Acceleron Pharma Inc. in 2021, brought in $70 million in its first full quarter on the U.S. market, exceeding analysts’ estimates.
“Another quarter of the same story,” BMO analyst Evan Seigerman wrote in a note. “Merck commercial outperformance remains steady as Winrevair launch exceeds even the highest expectations.”
Adjusted earnings will be $7.94 to $8.04 a share, Merck said, reduced by about 60 cents per share to reflect one-time charges related to the acquisitions of the biotech firm EyeBio and the aquatic business of Elanco Animal Health Inc.
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