Merck & Co. Inc. (NYSE:MRK) shares fell over 6% in early trading Tuesday after the pharmaceutical giant reported a mixed second-quarter earnings picture, with adjusted earnings surpassing analyst consensus but overall sales experiencing a slight year-over-year decline and missing revenue expectations.
The market’s cautious reaction underscores investor scrutiny of the company’s performance, particularly a significant drop in Gardasil vaccine sales, even as its blockbuster cancer drug Keytruda continued its strong growth trajectory.
While adjusted earnings per share (EPS) of $2.13 surpassed consensus estimates of $2.04, it marked a decline from the $2.28 reported in the prior-year period. Similarly, total sales of $15.81 billion, a 2% year-over-year decrease, narrowly missed analysts’ projections of $15.94 billion.
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The pharmaceutical segment recorded $14.1 billion in sales, down 2% year over year, primarily due to vaccines and immunology, partially offset by growth in oncology and cardiology.
Keytruda, an immunotherapy for cancer, delivered $7.96 billion in global sales, up 9% year-over-year, reflecting continued uptake across more cancer types and earlier treatment stages.
However, GARDASIL and GARDASIL 9, vaccines to prevent HPV-related diseases, generated $1.1 billion in sales, down 55% compared to last year. The company cited lower demand in China.
Excluding China, sales declined 3%, or 4% excluding the impact of foreign exchange, reflecting lower demand in Japan following a national catch-up immunization program, as well as the timing of public-sector purchases in certain international markets. U.S. sales increased 2% in the quarter.
The diabetes franchise, led by JANUVIA and JANUMET, remained mostly flat at around $623 million, with a slight 1% sales decrease.
Newer products, including Winrevair sales, a therapy for pulmonary arterial hypertension (a rare heart-lung condition), saw accelerated sales since its launch, reaching $336 million compared to $70 million a year ago.
CAPVAXIVE, a 21-valent pneumococcal conjugate vaccine, saw $129 million in sales, representing continued uptake since the third-quarter 2024 launch in the U.S.
Animal Health sales increased 11% to $1.65 billion, primarily due to higher demand for Livestock products, the inclusion of sales from the Elanco aqua business acquired in July 2024, higher pricing, and improved supply.
Merck launched a new multiyear optimization initiative to enable the transformation of its portfolio by generating an expected $3.0 billion in annual cost savings.
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