Merck is Perplexed by the Abrupt Decline in Gardasil Sales in China.

(VOR News) – The launch of Merck’s pulmonary arterial hypertension (PAH) therapy Winrevair (sotatercept) and iconic cancer drug Keytruda was accompanied by robust sales, but the good news was overshadowed by Gardasil’s unexpectedly flat sales.

This decade, HPV vaccine sales have been on an unprecedented high in China as a result of its increasing popularity. In the second quarter, it generated revenues of $2.48 billion, an increase of 1% over the prior year.

Gardasil is doing well outside of China, according to Merck.

Merck’s press release attributed the growth to higher U.S. sales owing to higher prices, demand, and public sector purchasing patterns, as well as higher demand in overseas markets.

Despite this increase in sales, a decline in sales in China was attributed to the timing of shipments compared with the previous year.

The announcement caused Merck’s stock to drop by 9%. According to Third Bridge analyst Lee Brown, the last time the company’s shares saw a daily decline of at least 9% was on November 5, 2021. Pfizer announced on that day in the pandemic that Paxlovid, its COVID antiviral medication, was more effective than Lagevrio, Merck’s antiviral medication.

Since its approval in 2006, Gardasil’s revenue has increased dramatically, rising from $3.9 billion in 2020 to $5.7 billion in 2021, $6.9 billion in 2022, and $8.9 billion last year. With a 14% increase in sales, the momentum persisted in the first quarter of this year.

China represents between 60% and 70% of Gardasil’s foreign sales, according to CEO Rob Davis’ statement on Tuesday. Zhifei Biological Products, Merck’s commercial partner in China, is in charge of the vaccine.

“We are attempting to comprehend and remain unclear about the significant decrease in Zhifei’s shipments to the vaccination sites that we observed in the second quarter,” Davis stated. “I would like to point out that the reduction during the second quarter was unexpected and marked a significant divergence from previous trends we’ve seen.”

Several factors are at play, and Merck and Zhifei are “teasing them out.”

The CEO stated that “this step down” was experienced by the whole HPV market in China and that it wasn’t a “Merck-specific event.” He added that China’s “anti-bribery” and “anti-corruption” campaigns, which the nation launched early this year, have affected HPV sales in China generally.

Given that over 60% of eligible girls in China have not yet received the HPV vaccination, Merck continues to believe that Gardasil’s prospects in the country are promising.

Additionally, Davis stated that the corporation is getting ready for “a significant opportunity” with a male indication.

Merck continues to believe that Gardasil will generate more than $11 billion in sales annually by 2030.

However, chief financial officer Caroline Litchfield stated that if the company has to cut back on Gardasil shipments to Zhifei due to the increasing inventory in China, short-term revenue expectations may need to be modified.

Merck has increased its estimate for yearly sales to fall between $63.4 billion and $64.4 billion, a $200 million rise at the midpoint from Merck’s April projection, following the company’s announcement of an overall second-quarter revenue increase of 7% to $16.1 billion. Starting in 2023, the revised midpoint would result in a 6% rise in revenue.

Merck, meantime, is relying significantly on Winrevair’s performance as it braces for the loss of exclusivity of the world’s best-selling medication, Keytruda. The drug outperformed analyst estimates, bringing in $70 million during its first quarter of sales.

Winrevair’s sales were predicted by data analytics firm FactSet to reach $56 million in the quarter, with the company’s revenues expected to reach $3.9 billion by 2029.

The first disease-modifying therapy for the lung condition, which was obtained in a $11.5 billion Acceleron buyout in 2021, is off to a rapid start. In the last days of the first quarter, the FDA approved Winrevair with fewer warnings and a larger label than analysts had anticipated.

According to Litschfield, by the end of June, over 2,000 patients had prescriptions for Winrevair, and over 500 doctors had filled them. Keytruda’s sales for the quarter increased by 16% to $7.3 billion. During that time, the cancer powerhouse generated 45% of the company’s income.

SOURCE: FPN

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