Merck’s 2025 Revenue Forecast: Challenges Surface as Gardasil Shipments Halt

In a significant update on Tuesday, Merck & Co. released its full-year 2025 revenue guidance, which sent shockwaves through the market as it fell short of Wall Street expectations. The pharmaceutical giant’s decision to temporarily pause shipments of its key HPV vaccine, Gardasil, into China has raised concerns among investors, leading to an over 7% drop in Merck’s shares during premarket trading.

Merck anticipates 2025 sales to be in the range of $64.1 billion to $65.6 billion. This projection is notably below the consensus estimate of $67.31 billion from analysts surveyed by LSEG. The halt in Gardasil shipments, which commenced in February and is expected to last at least until mid-2025, is primarily driven by the company’s strategy to reduce excess inventory and support its partner’s financial stability in China.

The Gardasil Dilemma

Gardasil is more than just a vaccine; it plays a pivotal role in cancer prevention, targeting HPV, the most common sexually transmitted infection in the U.S. Notably, China’s market represents a significant portion of Gardasil’s international revenue, making the current situation concerning for Merck. Investors have voiced their unease over the declining sales of the vaccine in China over the past year, making the pause even more impactful.

In a statement, a Merck spokesperson emphasized that this strategic pause is crucial for “a more rapid reduction of excess inventory.” The company projects that Gardasil sales will grow between 2% to 4%, but revenue from China could be drastically affected, potentially falling short of the $1 billion mark. This forecast sets a challenging stage for Merck, which relies heavily on Gardasil’s revenue, particularly as it anticipates losing exclusivity for its top-selling cancer therapy, Keytruda, in 2028.

Earnings Call Insight

As Merck gears up for its earnings call, scheduled for 9 a.m. ET, stakeholders are keenly awaiting insights regarding the Gardasil situation. The company anticipates adjusted earnings between $8.88 and $9.03 per share, aligning closely with analyst expectations, despite a projected charge of approximately 9 cents due to its licensing deal with LaNoVa, a privately held drugmaker.

Merck’s latest performance for the fourth quarter of 2024 proved to be a mixed bag. The company reported $15.62 billion in revenue, slightly surpassing expectations of $15.49 billion, attributed to strong sales in oncology and cardiovascular treatments.

Fourth Quarter Financial Highlights

Here’s a closer look at Merck’s financial performance for the fourth quarter:

• Earnings per Share: $1.72 adjusted vs. $1.62 estimated
• Revenue: $15.62 billion vs. $15.49 billion estimated

Net income rose to $3.74 billion, translating to $1.48 per share, in stark contrast to a net loss of $1.23 billion during the same period the previous year. Excluding acquisition and restructuring costs, Merck’s adjusted earnings came in at $1.72 per share.

Key Drug Performance: What to Watch

Merck’s pharmaceutical division reported $14.04 billion in revenue, a 7% increase year-over-year, thanks largely to strong Keytruda sales, which reached $7.84 billion—up 19% from the previous year. This performance was driven by increased usage in earlier-stage cancers and a solid demand for the drug in metastatic cases.

However, Gardasil’s sales experienced a setback, bringing in $1.55 billion, which was a 17% decline from the fourth quarter of 2023 and slightly under the estimated $1.58 billion. Another key player, the Type 2 diabetes treatment Januvia, saw sales drop to $487 million, a 38% decrease attributed to reduced prices, supply issues in China, and competition from generics.

Conclusion: Navigating Uncertainty

As the pharmaceutical landscape continues to evolve, Merck’s ability to navigate challenges like the Gardasil situation will be vital. With the upcoming earnings call on the horizon, investors and stakeholders alike will be looking for clarity on how the company plans to bolster its position amid shifting dynamics, especially in its crucial Asian markets.

At Extreme Investor Network, we believe that keeping informed and understanding these market shifts is key to making informed investment decisions. As Merck addresses its challenges head-on, the implications for both the company and its stakeholders will undoubtedly unfold in the coming months. Stay tuned for further updates as we analyze and report on this unfolding story.