Merck Tops Earnings Estimates, Ups 2024 Forecast with Robust Drug Sales

Merck & Co has updated its 2024 financial outlook, reflecting stronger-than-anticipated sales from its leading cancer drug, Keytruda, and its human papillomavirus vaccine, Gardasil. The company now projects annual earnings to be between $8.53 and $8.65 per share, revising its previous estimate upwards. Revenue expectations for the year have also been adjusted to a range of $63.1 billion to $64.3 billion. These new forecasts take into account a $0.26 per share expense related to the acquisition of cancer drug developer Harpoon Therapeutics, which Merck completed for $680 million.

In the first quarter, Merck's earnings per share (EPS) reached $2.07 on an adjusted basis, surpassing Wall Street expectations of $1.93, with revenues totaling $15.8 billion. The pharmaceutical division, which includes Keytruda and vaccine sales, contributed $14.01 billion, marking a 10% increase from the same period in the previous year. The company's adjusted gross margin improved to 81.2%, higher than the forecasted 80.4%.

Keytruda, which was the top-selling drug globally in 2023, is on track to exceed $30 billion in sales by 2026, despite its patent set to expire in 2028. The expiration is anticipated to impact sales significantly, prompting Merck to focus on diversifying its revenue streams. Growth for Gardasil, particularly in China, where Merck is pursuing expanded approval for the vaccine's use in men, has also bolstered the company's financial position. Furthermore, Merck has projected that its new oncology products in development could generate approximately $20 billion by the mid-2030s, nearly doubling previous forecasts.