Merck announced on Thursday that its first-quarter revenue and adjusted earnings surpassed expectations, driven by robust sales of its blockbuster cancer drug Keytruda and vaccine products.
Additionally, the pharmaceutical giant revised its full-year revenue and adjusted earnings forecasts upward and narrowed the range. Merck now anticipates 2024 sales to be between $63.1 billion and $64.3 billion, compared to the earlier projection of $62.7 to $64.2 billion.
Similarly, the company expects full-year adjusted earnings of $8.53 to $8.65 per share, up from the previous forecast of $8.44 to $8.59 per share.
The revised outlook incorporates a one-time charge of approximately 26 cents per share related to Merck’s acquisition of Harpoon Therapeutics in January, a company specializing in immune-based cancer drugs.
Additionally, the guidance accounts for a negative impact of 30 cents per share from foreign exchange changes. Merck’s shares surged by 4% following the announcement of the results.
In the first quarter, Merck reported adjusted earnings per share of $2.07, exceeding the expected $1.88, and revenue of $15.78 billion, surpassing the anticipated $15.20 billion.
The company recorded a net income of $4.76 billion, or $1.87 per share, for the quarter, compared to $2.82 billion, or $1.11 per share, in the same period last year. The first-quarter results include a one-time charge related to the Harpoon deal.
Merck’s strong performance in the first quarter aligns with its efforts to prepare for the expiration of Keytruda’s patent in 2028, which is expected to lead to a decline in sales.
However, the company has secured new deals and launched key drugs to offset potential revenue losses.
Notably, Winrevair, a recently approved medication for a progressive lung condition, is anticipated to contribute significantly to Merck’s revenue. Analysts predict that global sales of Winrevair could reach $5 billion by 2030.
Merck is actively managing costs through a restructuring program announced in February. The program aims to enhance the manufacturing network of its pharmaceutical division and animal health business.
In the first quarter, the company incurred restructuring charges of $246 million, which are excluded from its adjusted results.
The pharmaceutical unit of Merck reported a 10% increase in revenue to $14.01 billion compared to the same period last year.
Keytruda, the primary driver of growth, generated $6.95 billion in revenue, surpassing analyst expectations. The company also observed a surge in sales of Gardasil, a vaccine preventing HPV-related cancers.
However, sales of Januvia, a Type 2 diabetes treatment, declined due to lower prices, reduced demand in the U.S., and generic competition in international markets.
Additionally, sales of Merck’s Covid antiviral pill Lagevrio declined, reflecting decreased demand as Covid cases declined from their peak.
Merck’s animal health division reported $1.51 billion in sales for the first quarter, up 1% from the same period last year. In February, Merck announced the acquisition of Elanco Animal Health’s aquatic business for $1.3 billion, a move aimed at expanding its portfolio in the animal health sector.
