Merck executives can be forgiven for being a little smug on Thursday. The company, which has multiple facilities in eastern Pennsylvania and New Jersey, posted another quarter of robust sales and profit growth, beating analyst estimates on both counts. Wall Street rewarded the company with a nearly 5% increase in its share price.
Any leader would likely be proud if they could report increases of at least 50% over the prior year quarter in all major financial metrics. Sales, net profit, earnings per share (EPS) all exceeded expectations. The only negative you can find is that the Animal Health product line only grew by 4%; not so bad since Animal Health represents just over 9% of Merck’s portfolio.
As has been the case for several quarters, Merck’s sales have been led by Keytruda, the company’s cancer treatment which continues to gain regulatory approvals in the United States and around the world to fight a growing number of types. of cancer. Additionally, Merck continued to advance development programs in its oncology portfolio with multiple approvals during the quarter at various stages of the disease.
Lagevrio, co-developed with Ridgeback Biotherapeutics, an oral antiviral treatment for Covid-19, burst onto the market with more than $3 billion in sales in the quarter, compared to none in 2021. Additionally, Gardasil, the Merck’s treatment for HPV (human papillomavirus), surpassed the magical $1 billion sales mark that characterizes a blockbuster drug.
In the first quarter of 2022, EPS (earnings per share) from continuing operations under GAAP (generally accepted accounting principles) was $1.70. Non-GAAP EPS was $2.14.
“We successfully delivered on our key strategic priorities and achieved strong revenue and net income growth,” Chief Executive Officer and President Robert M. Davis said in a statement. “The strong first quarter performance was driven by significant clinical advances in our research pipeline and effective commercial execution across a broad range of key growth drivers.”
First quarter sales performance
Merck reported that first-quarter pharmaceutical sales rose 53% to $14.1 billion. Excluding LAGEVRIO, pharmaceutical sales growth in the first quarter was 18% and was mainly driven by oncology, vaccines and hospital acute care products. The COVID-19 pandemic had an adverse effect on sales in the first quarter of 2021 by approximately $500 million, which had a favorable impact on the growth rate reported in the first quarter of 2022.
LAGEVRIO sales totaled $3.2 billion for the first quarter, primarily comprised of sales in the United States, United Kingdom, Japan and Australia. There were no sales of LAGEVRIO in the first quarter of 2021.
KEYTRUDA sales increased 23% to $4.8 billion. The Company states that the global sales growth of KEYTRUDA reflects continued strong momentum in NSCLC (non-small cell lung cancer) indications as well as adoption in other indications, including RCC (renal cell carcinoma), squamous cell carcinoma of the head and neck, TNBC (triple negative breast cancer) and MSI-H (high levels of micro-satellite instability) cancers.
A 75% increase in revenue from the Lenvima alliance, primarily due to increased demand in the US and China, as well as a 17% increase in revenue from the Lynparza alliance, reflecting continued adoption in the globally, particularly in the United States, also contributed to the increase in oncology sales.
Vaccines growth in the first quarter, Merck said, was primarily driven by higher combined sales of GARDASIL and GARDASIL 9, vaccines to prevent certain cancers and other diseases caused by HPV. First-quarter sales of GARDASIL and GARDASIL 9 increased 59% to $1.5 billion, primarily due to strong demand outside the United States, particularly in China, and a supply increased. The increase in sales in the United States reflects the purchasing habits of the public sector.
Growth in vaccines also resulted from higher sales of ROTATEQ (Rotavirus Vaccine, Live, Oral, Pentavalent), a vaccine to help protect against rotavirus gastroenteritis in infants and children, which increased by 36 % to reach $216 million due to public sector purchasing habits in the United States.
Growth in hospital acute care reflects higher global demand for BRIDION (sugammadex) injection 100 mg/mL, a drug for the reversal of neuromuscular blockade induced by rocuronium bromide or vecuronium bromide in adults and pediatric patients 2 years and older undergoing surgery.
Sales increased 16% to $395 million, primarily due to the continued resumption of surgeries in the quarter. Increased sales of ZERBAXA (ceftolozane and tazobactam), a combination cephalosporin antibacterial and beta-lactamase inhibitor for the treatment of adults with certain bacterial infections, also contributed to acute care growth in hospital environment.
Pharmaceuticals sales growth was partially offset by lower combined sales of ISENTRESS/ISENTRESS HD (raltegravir), an HIV integrase inhibitor used in combination with other antiretroviral agents for the treatment of HIV-1 infection, which decreased 24% to $158 million, reflecting lower global demand, including the impact of the timing of a public tender.
Pharmaceuticals sales growth was also partially offset by lower combined sales of JANUVIA (sitagliptin) and JANUMET (sitagliptin and metformin HCI), which fell 5% to $1.2 billion, reflecting lower demand in the United States, partially offset by higher demand in certain international markets. The company will lose market exclusivity for JANUVIA and JANUMET in the European Union and China in Q3 2022.
Animal health revenues
According to Merck, Animal Health sales totaled $1.5 billion in the first quarter of 2022, an increase of 4% compared to the first quarter of 2021. Excluding the unfavorable foreign exchange effect, Animal Health sales increased by 9%. The increase in sales of companion animal products was mainly driven by the BRAVECTO (fluralaner) range of parasiticide products as well as by vaccines. Livestock product sales growth driven by rising global demand for ruminant and poultry products
“We remain focused on driving our strategy,” Davis said, “which is led by science, and are confident in the sustainability of our growth prospects, as we continue to deliver value to patients, shareholders and to all stakeholders now and in the future.”
Merck raises and narrows its full-year guidance for revenue and EPS.
At mid-April 2022 exchange rates, Merck now expects sales growth of 17% to 19% in 2022, with estimated annual revenue of between $56.9 billion and $58.1 billion. of dollars. Merck is increasing and reducing its GAAP EPS range for the year 2022 between $5.90 and $6.02. Merck is increasing and reducing its non-GAAP EPS range for the year 2022 to be between $7.24 and $7.36.
The non-GAAP range excludes costs related to acquisition and disposal and costs related to restructuring programs as well as income and losses from investments in equity securities. This full-year forecast includes expected sales of $5.0 billion to $5.5 billion from LAGEVRIO. Merck shares profits equally with its partner, Ridgeback.