Merck, Sharp & Dohme Inc. (MSD; NYSE: MRK) has reported its financial results for the second quarter of 2024, with global revenues reaching USD 16.1 billion, marking an 11% increase year-on-year when excluding currency impacts. Despite this growth, the company’s stock price declined by 9.81% as investors reacted to the earnings report and a perceived lack of preparedness by MSD executives for the market downturn in China, as discussed during the earnings conference call.
MSD raised its annual guidance slightly, forecasting full-year revenues between USD 63.4 billion and USD 64.4 billion. However, the key challenge for MSD is the impending patent expiry of Keytruda (pembrolizumab), the world’s top-selling programmed death-1 (PD-1) inhibitor, in 2028. Keytruda continued to be a significant revenue driver in Q2’24, with sales up 21% to USD 7.3 billion.
A bright spot in the quarter was the launch of Winrevair (sotatercept), a first-in-class biologic for pulmonary arterial hypertension (PAH), which generated USD 70 million in its first quarter of sales.
The growth of MSD’s human papillomavirus (HPV) vaccine Gardasil/Gardasil-9 was less robust in Q2’24, with sales growing by only 4% year-on-year to USD 2.478 billion, primarily driven by the US market. Sales in China were notably lower due to the lower sell-out of Gardasil by distributor Zhifei Biological Products Co., Ltd.
MSD’s total China market sales declined by 5% year-on-year in Q2 to USD 1.79 billion and by 1% over the first half of 2024 to USD 3.53 billion. This represents a significant deceleration from the 39% growth reported in Q2 2023 and 45% growth over the first six months of 2023.
Merck CEO Rob Davis discussed the China downturn, revealing that the company was surprised by reduced shipments by distribution partner Zhifei Bio, which has been attributed to China’s anti-corruption efforts impacting HPV vaccine promotion and distribution.- Flcube.com
