Note: All changes are versus the prior-year period unless otherwise stated
"We are encouraged by the strong momentum of our underlying business led by our key growth drivers as the impact of the [COVID-19] pandemic on our performance lessens," commented new CEO Rob Davis, who took over the reins from longtime chief executive Kenneth Frazier this month.
Growth in oncology was largely driven by higher sales of Keytruda, as well as greater alliance revenues from Lynparza and Lenvima, while the vaccines unit saw Gardasil/Gardasil 9 sales rebounding during the quarter largely due to the ongoing COVID-19 pandemic recovery.
Merck & Co. said COVID-19 had hurt sales in the second quarter, but to a lesser extent than in the year-earlier period, citing an estimated $900-million year-over-year benefit amid the ongoing pandemic recovery. The company also indicated that quarterly profit took a hit as a result of a $1.7-billion charge related to its acquisition of Pandion Therapeutics, which was completed in April, as well as higher expenses for drug development.
Merck said it believes patients and healthcare systems have now "largely adapted to the impacts of COVID-19," and that the pandemic should only reduce its 2021 revenue by less than 3%.
The company also slimmed down last month via a spinoff that combined its Organon women's health unit with its businesses selling biosimilars and established brands. It now expects full-year revenues somewhere between $46.4 billion and $47.4 billion. That's down from its April forecast of $51.8 billion and $53.8 billion because of revenue lost from the spinoff, but within the range Merck had predicted taking the Organon split into account, which was between $45.8 billion and $47.8 billion.
Meanwhile, full-year earnings for 2021 are expected to be $5.47 to $5.57 per share, down from a previous range of $6.48 to $6.68. Merck noted that neither the sales nor the earnings guidance include the impact of a potential launch of its COVID-19 antiviral drug candidate molnupiravir, for which the company recently signed a $1.2-billion supply deal with the US government.
Merck gained $9 billion via the Organon spinoff and plans to use the funds for share buybacks and business development, although will not be undertaking any large deals. "One of the areas we continue to believe we do not need to go is to the very large synergy-driven deals. I think we have enough firepower in our own pipeline," Davis remarked. However, the executive said that the company will continue to make smaller, targeted acquisitions, particularly to broaden its small cancer drug portfolio, adding "we want to build upon that strength and actually see ourselves as a company that over time can be a broad player across oncology."
Edward Jones analyst Ashtyn Jones noted that the results reflect "a solid recovery from second-quarter results last year at the height of the pandemic," with cancer screenings and other doctor visits picking up and sales of most key drugs increasing.
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