The logo of Merck & Co. is shown on a screen at the New York Stock Exchange (NYSE) in New York, New York, US, November 17, 2021.
Andrew Kelly | Reuters
The pharmaceutical giant posted a net quarterly loss, however, due to previously announced charges related to agreement the company struck a deal in October with Japanese drugmaker Daiichi Sankyo to jointly develop three sought-after cancer treatments.
Here’s what Merck reported for the fourth quarter compared to what Wall Street expected, based on a survey of analysts from LSEG, formerly Refinitiv:
- Earnings per share: 3 cents adjusted against an expected loss of 11 cents per share
- Income: $14.63 billion versus $14.50 billion expected
Merck shares closed nearly 5% higher on Thursday.
The company posted a net loss of $1.23 billion, or 48 cents per share, for the quarter. That compares with net income of $3.02 billion, or $1.18 per share, in the prior period.
Excluding acquisition and restructuring charges, Merck earned 3 cents per share for the fourth quarter. The company’s results include a charge of $1.69 per share related to the Daiichi Sankyo deal.
Merck posted revenue of $14.63 billion for the quarter, up 6% from the same period last year.
These results come as Merck is making significant progress in preparing for Keytruda’s patent expiration in 2028, with a handful of new deals under its belt and key drugs ahead. Losing exclusive rights to the drug will likely mean its sales will decline, forcing the company to draw revenue elsewhere.
Merck CEO Robert Davis said Thursday that the company “feels very good” about the progress it has made in developing its drug portfolio. But he said “we need more” products, adding that the company is still interested in signing acquisitions or partnership deals.
Merck also issued full-year 2024 guidance that was broadly in line with expectations. The company expects revenue to range between $62.7 billion and $64.2 billion and adjusted earnings to be $8.44 to $8.59 per share this year.
Analysts surveyed by LSEG had expected Merck to forecast full-year sales of $63.52 billion and adjusted earnings of $8.42 per share.
This adjusted earnings outlook includes a one-time charge of approximately 26 cents per share related to Merck’s acquisition of Harpoon Therapeuticswhich develops immune-based cancer drugs, earlier this month.
Merck also announced a new restructuring plan for 2024, which aims to improve the production network of both its pharmaceuticals and animal health businesses. Merck recorded $190 million in program-related charges in the fourth quarter, which is excluded from its adjusted results.
That brings Merck’s total restructuring charges for the period to $401 million. This figure also includes charges from a restructuring program the company started in 2019.
The pharmaceutical business is growing
Merck’s pharmaceutical business, which develops a wide range of drugs for various disease areas, posted revenue of $13.14 billion during the quarter. This is up 8% from the same period a year ago.
Merck’s immunotherapy Keytruda, which is used to treat many types of cancer, largely fueled the growth.
The drug had revenue of $6.61 billion, up 21% from the previous quarter. Analysts had expected $6.41 billion in Keytruda sales, according to FactSet estimates.
The treatment saw growth from increased use in early-stage cancers and strong demand among patients with metastatic disease, or cancer that has spread to a different part of the body, Merck CFO Caroline Litchfield said during an earnings conference call Thursday. Merck also saw a jump in sales of Gardasil, a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the US
Gardasil posted sales of $1.87 billion, up 27% from the fourth quarter of 2022. That’s slightly below the $1.92 billion analysts were expecting, according to FactSet estimates.
Merck’s experimental Covid-19 treatment pill, called molnupiravir
MERCK & CO INC | via Reuters
Meanwhile, sales of the antiviral pill Lagevrio fell to $193 million during the period, down 77% from the $825 million reported for the fourth quarter of 2022. However, the drug beat analysts’ expectations for 69 million dollars in sales, according to FactSet.
That’s no surprise: Demand for Lagevrio and other Covid products from companies like Pfizer and Moderna has plummeted in the past year as cases and concerns about the virus have eased since the peak of the pandemic.
Merck’s type 2 diabetes treatment Januvia also saw sales fall to $787 million during the quarter, down 14% from the same period a year ago. The company said competition from cheaper generic drugs outside the US, particularly in Europe, and weaker demand in the US weighed on sales.
That total was still higher than analysts’ estimate of $732.3 million for the period, according to FactSet.
Januvia is one of 10 drugs that will be subject Medicare drug price negotiations, a policy under the Inflation Reduction Act that aims to make costly drugs more affordable for seniors. Also on Thursday, Medicare makes introductory price offers for each of these drugs.
Merck’s animal health division, which develops vaccines and drugs for dogs, cats and cattle, posted sales of $1.28 billion, up 4% from the same period a year ago.
The company said higher demand for pet products such as Bravecto flea and tick treatment led to the increase.
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