Merck & Co. (NYSE: MRK) has released its Q4 and full-year 2022 financial report, showcasing a robust performance with 22% year-on-year (YOY) growth in annual global sales to USD 59.3 billion. Excluding sales of COVID-19 therapy Lagevrio (molnupiravir) and foreign exchange impacts, growth was 15%. However, Q4 performance saw a slight slowdown, with sales up 8% to USD 13.8 billion, excluding foreign exchange effects.
Keytruda and Gardasil Lead the Way
The PD-1 inhibitor Keytruda (pembrolizumab) accounted for USD 20.9 billion of the year’s revenues, up 27% in constant currency terms. The human papillomavirus (HPV) vaccine family Gardasil generated USD 6.9 billion, up 27% YOY. Lagevrio contributed USD 5.7 billion to the annual sales, though MSD forecasts a decline to around USD 1 billion in the next year due to falling demand for the COVID-19 therapy.
Other notable products with over a billion-dollar annual sales included the PROQUAD measles, mumps, and rubella vaccine, the Varivax herpes zoster vaccine, neuromuscular relaxant Bridion (sugammadex), and PARP inhibitor Lynparza (olaparib), the latter in partnership with AstraZeneca. The Type 2 diabetes drug Januvia/Janumet (sitagliptin/sitagliptin + metformin) faced generic competition in Europe and Asia and declining demand in the US, resulting in a 15% sales drop to USD 4.5 billion.
China Performance
MSD’s China performance was driven by strong demand for Gardasil. Sales in China increased 20% YOY to USD 5.102 billion over the full year, despite a 10% Q4 decline to USD 1.216 billion. MSD’s distribution partner for Gardasil in China, Chongqing Zhifei Biological Co., Ltd (SZ.300122), recently signed a supply agreement for the HPV vaccine worth over RMB 100 billion (USD 14.8 billion). Lagevrio also secured market approval in China in December.
Preparing for Life After Keytruda
During the Q4 earnings call, Citibank investor Andrew Baum questioned MSD’s strategy to manage the loss of exclusivity (LOE) for Keytruda, given its significant contribution to revenues. CEO Rob Davis highlighted that Keytruda will lose exclusivity in the US and China in 2028, Europe in 2030, and Japan in 2032. MSD plans to maximize Keytruda’s potential through expanded indications and new combination regimens, including its use in the adjuvant setting for cancers. The FDA recently approved Keytruda for post-surgery treatment in non-small cell lung cancer (NSCLC) patients. MSD is also partnering with Moderna on a personalized mRNA therapeutic cancer vaccine combined with Keytruda for melanoma treatment, reporting promising Phase II results in December.
Pipeline Strengths
MSD’s cardiovascular pipeline is led by the oral macrocyclic peptide PCSK9 inhibitor sotatercept, which posted positive Phase III data in pulmonary arterial hypertension and is set for approval filing. CEO Davis expects this portfolio to exceed USD 10 billion by the mid-2030s. Additionally, MSD has aggressively expanded its antibody drug conjugate (ADC) pipeline through strategic deals, including three partnerships with China-based Sichuan Kelun Biotech worth over USD 11 billion, adding nine of Kelun’s pipeline ADCs. The USD 1.3 billion acquisition of Imago Biosciences in November 2022 also secured potential first-in-class treatments for myeloproliferative neoplasms (MPNs) and other bone marrow diseases.-Fineline Info & Tech
