By Michael Erman and Christy Santhosh
(Reuters) -Merck & Co posted higher third-quarter revenue on Thursday, as growth from its blockbuster cancer drug Keytruda offset falling sales from human papillomavirus vaccine Gardasil in China.
However, shares fell nearly 2% after Merck lowered the high end of its revenue forecast for the full year. It now expects revenue of $64.5 billion to $65.0 billion compared with its prior view of $64.3 billion to $65.3 billion.
J.P.Morgan analysts called the quarterly beat “modest,” adding the annual forecasts were “largely reiterated.”
Merck shares have fallen about 5% so far in 2025, as investors weigh the company’s efforts to grow beyond Keytruda against broader industry headwinds, including potential U.S. drug pricing reforms.
“We do expect continued growth in Keytruda, albeit at a slightly slower pace than we’ve seen as we are getting to peak penetration in some of the indications, and we do expect some headwind from price in our ex-U.S. markets,” said CFO Caroline Litchfield.
Merck is working to add new drugs to its pipeline before Keytruda faces competition from cheaper biosimilars later this decade.
The company is focusing on newer drugs, including lung disease treatments Winrevair, from its 2021 acquisition of Acceleron Pharma, and Ohtuvayre, which was recently acquired in a $10 billion takeover of UK-based Verona Pharma.
Sales of Winrevair rose 141% to $360 million in the quarter.
However, Bernstein analyst Courtney Breen said the drug’s sales were materially below expectations, calling it “not a good sign for a key growth driver for the company.”
Merck posted revenue of $17.28 billion in the quarter, compared with analyst estimates of $16.96 billion, according to LSEG data.
On an adjusted basis, the company earned $2.58 per share, topping Wall Street estimates by 23 cents.
Sales of immunotherapy Keytruda rose 10% to $8.1 billion in the quarter. Gardasil sales fell to $1.75 billion, but came in ahead of the Wall Street forecast of $1.66 billion.
The company has not been making new shipments of the vaccine for China. It has said distributors there are working through their inventories after a fall in demand due to pressure on consumer spending in the country.
Excluding China, Gardasil sales fell 3%, mainly due to lower sales in Japan following the end of reimbursement for the catch-up vaccination program.
Merck said it expects full-year earnings of $8.93 to $8.98 a share, compared with its prior forecast of $8.87 to $8.97.
(Reporting by Michael Erman and Christy Santhosh in Bengaluru; Editing by Stephen Coates and Bill Berkrot)
