Merck surpasses earnings expectations and boosts sales forecast due to high demand for top drugs such as Keytruda.

• Merck reported strong sales from its blockbuster cancer drug Keytruda and other treatments in its oncology and vaccines portfolios, as well as a new cardiovascular drug, resulting in second-quarter revenue and adjusted earnings that topped estimates.
• Although the pharmaceutical giant increased its full-year sales forecast to a range of $63.4 billion to $64.4 billion, it reduced its adjusted profit guidance to between $7.94 and $8.04 per share.
• As Keytruda's patent expires in 2028, Merck is preparing to offset its losses with new deals and key drug launches.

Wall Street's expectations were exceeded by the company's second-quarter revenue and adjusted earnings, which were driven by strong sales of Keytruda and other treatments in its oncology and vaccines portfolios, as well as a newly launched cardiovascular drug.

The pharmaceutical company slightly raised its full-year sales forecast to a range of $63.4 billion to $64.4 billion due to increased demand for key products, particularly its oncology treatments.

Merck updated its adjusted profit guidance to a range of $7.94 and $8.04 per share, reflecting one-time charges of 26 cents and 51 cents per share for its acquisitions of Harpoon Therapeutics and EyeBio, respectively.

According to a survey of analysts by LSEG, Merck's second-quarter performance exceeded Wall Street's expectations.

• Earnings per share: $2.28 adjusted vs. $2.15 expected
• Revenue: $16.11 billion vs. $15.84 billion expected

In the second quarter, the drugmaker recorded a net income of $5.46 billion, or $2.14 per share, which is a significant improvement from the net loss of $5.98 billion, or $2.35 per share, in the same period last year, which included a charge related to its acquisition of Prometheus Biosciences.

For the three-month period, Merck earned $2.28 per share, excluding acquisition and restructuring costs.

In the previous quarter, Merck generated $16.11 billion in revenue, which represents a 7% increase compared to the same period in the previous year.

As Keytruda's patent expires in 2028, Merck is preparing to offset its losses with new deals and key drug launches.

Winrevair, a medication approved in the U.S. in March to treat a progressive and life-threatening lung condition, is expected to have worldwide sales of $5 billion by 2030.

The pneumococcus bacteria, which can lead to serious illnesses and lung infections, is protected by Capvaxive, a vaccine that was recently approved in the U.S.

Pharmaceutical unit sales top estimates

During the second quarter, Merck's pharmaceutical division generated $14.41 billion in revenue, representing a 7% increase from the same period in the previous year. This division focuses on developing a diverse range of drugs for various disease areas.

During the quarter, Keytruda, the company's immunotherapy, generated $7.27 billion in revenue, representing a 16% increase from the previous year. Analysts had predicted $7.12 billion in sales for Keytruda, based on estimates from StreetAccount.

Nearly flat were sales of Gardasil, a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S.

In the second quarter of 2023, Gardasil generated $2.48 billion in sales, representing a 1% increase from the previous quarter. Merck attributed the growth to higher prices in the U.S. market but was hindered by lower sales in China due to shipping delays.

According to StreetAccount, analysts expected $2.51 billion in segment results, but the actual amount was slightly below that.

Winrevair recorded $70 million in revenue for the second quarter after its approval in March, exceeding analysts' expectations of $59.4 million in sales.

The sales of Januvia, the company's Type 2 diabetes treatment, decreased by 27% to $629 million compared to the same period last year. Merck attributed the decline to lower demand and prices, as well as generic competition in several countries.

The Medicare drug price negotiations, which include Januvia and nine other drugs, aim to make expensive medications more affordable for seniors. These negotiations, a key provision of President Joe Biden's Inflation Reduction Act, will conclude at the start of August.

Despite a 46% decline in sales of Merck's Covid antiviral pill, Lagevrio, during the quarter, it still exceeded analysts' expectations of $81.5 million in sales, according to StreetAccount.

Merck's animal health division, which produces vaccines and medications for dogs, cats, and cattle, reported $1.48 billion in sales for the second quarter. This represents a 2% increase from the previous year and is slightly below the forecasts of analysts surveyed by StreetAccount.