Merck & Company ((MRK)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In a recent earnings call, Merck & Company presented a mixed sentiment, reflecting strong performance in key areas such as oncology and new product launches, while also acknowledging challenges like GARDASIL’s performance in China and impacts from Medicare Part D redesign. The company remains optimistic about its long-term growth potential despite recognizing short-term obstacles.
Strong Overall Revenue Growth
Merck reported total company revenues of $15.6 billion for the fourth quarter of 2024, marking a 7% increase, or 9% when factoring out foreign exchange impacts. The Human Health business maintained its momentum with an 8% increase in sales, largely driven by oncology, while the Animal Health business also delivered impressive results with a 13% sales growth.
KEYTRUDA Performance
The flagship oncology drug, KEYTRUDA, saw its sales grow by 21% to $7.8 billion. This growth was fueled by robust global demand, increased uptake in treating earlier-stage cancers, and the application of combination therapies across various tumor types.
WINREVAIR Growth and Clinical Success
WINREVAIR contributed $200 million to sales, supported by strong prescription growth. Notably, the ZENITH trial for WINREVAIR demonstrated significant reductions in morbidity and mortality in pulmonary arterial hypertension, leading to an early termination of the trial due to its efficacy.
Innovative Pipeline and Future Growth Drivers
Merck’s innovative pipeline remains a beacon of potential, with 20 possible new growth drivers, including WINREVAIR and CAPVAXIVE. These represent over $50 billion in potential revenue, underscoring Merck’s future growth prospects.
Animal Health Business Growth
The Animal Health division achieved a 13% growth in sales, driven by increased demand in poultry and contributions from the newly acquired aqua portfolio from Elanco, highlighting the segment’s robust performance.
GARDASIL Challenges in China
GARDASIL’s sales dropped by 18% due to diminished demand in China, resulting in elevated inventory levels. In response, Merck has temporarily paused shipments to China to allow inventories to normalize.
Medicare Part D Redesign Impact
The redesign of Medicare Part D is anticipated to negatively impact Merck’s sales by approximately $400 million, affecting products such as WINREVAIR and the portfolio of small molecule oncology products.
VAXNEUVANCE Sales Decline
VAXNEUVANCE experienced a 9% decline in sales, as growth from international market launches was countered by competitive pressures within the U.S. market.
Uncertain GARDASIL Long-Term Target
Merck has withdrawn its $11 billion long-term target for GARDASIL sales, citing uncertainties related to the timing of economic recovery in China.
Forward-Looking Guidance
Despite the challenges, Merck remains optimistic about its future, forecasting revenue growth of 2% to 4% for 2025, excluding the effects of foreign exchange and GARDASIL sales in China. The company also reported a strong gross margin of 80.8% and projected earnings per share for 2025 to range between $8.88 and $9.03.
In summary, Merck’s earnings call reflected a cautious optimism, driven by strong performances in its oncology and animal health segments, despite facing significant challenges with GARDASIL in China and the Medicare Part D redesign. The company continues to focus on leveraging its innovative pipeline for future growth, maintaining a positive outlook for the upcoming fiscal year.
