Merck & Co. raises full-year forecasts as Q2 sales top estimates, led by Keytruda, vaccines

Headline results for the second quarter:

Pharmaceutical product sales

$10.5 billion



$11.8 billion (forecasts of $11 billion)



$2.7 billion


Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"Our science-led strategy and execution across our key growth pillars have driven another quarter of accelerating revenue growth with strength across our global portfolio," remarked CEO Kenneth Frazier.

In the quarter, sources indicated that Merck & Co. planned to pursue a number of mid-sized deals to expand its portfolio beyond Keytruda, as typified by its purchases of Tilos Therapeutics and Peloton Therapeutics. However, Frazier suggested that it would avoid bigger deals due to "the operational complexities, the cultural disruption and R&D disruption associated with large mergers."

Meanwhile, the drugmaker also recently acknowledged that it is preparing for the eventual departures of Frazier and R&D chief Roger Perlmutter, with the company initially focusing on internal candidates for CEO. The firm previously eliminated a policy that would have required Frazier to step down later this year when he turns 65.

Other results:

  • Keytruda: $2.6 billion, +58%, above forecasts of $2.5 billion, reflecting strong momentum in non-small-cell lung cancer and continued uptake in other indications
  • Januvia/Janumet: $1.4 billion, -6%, with pricing pressure in the US offsetting higher global demand
  • Gardasil/Gardasil 9: $886 million, +46%, driven by public sector buying patterns, demand and pricing in the US and the ongoing commercial launch in China
  • Proquad/M-M-R II/Varivax: $675 million, +58%, fuelled by higher demand in the US and Europe, as well as government tenders in Latin America
  • Bridion: $278 million, +16%
  • Isentress: $247 million, -19%
  • Zetia/Vytorin: $232 million, -39%, due to the loss of exclusivity
  • Sales in China: $745 million, + 41%

Looking ahead:

Merck now expects sales in 2019 of between $45.2 billion and $46.2 billion, revised from an earlier range of $43.9 billion to $45.1 billion. Meanwhile, earnings per share are now seen between $4.84 and $4.94, lifted from a previous forecast of between $4.67 and $4.79. Analysts anticipate earnings of $4.75 per share on $44.7 billion in revenue.

Chief financial officer Rob Davis suggested that Merck now expects to receive lower prices for its drugs in the US due to the political and public backlash over high costs. "We no longer see the benefit of price increases in the US," given the changed market dynamics, he said.

What analysts said:

"We estimate Keytruda sales will exceed $16 billion by 2022, driven by continuing uptake within lung cancer and increasing indications into other types of cancers," Edward Jones of Ashtyn Evans noted. The analyst added "given Merck's strong financial position, we believe the company will continue to supplement its internal drug development with acquisitions."

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