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Business

Merck raises 2022 forecast as COVID pill, cancer drug fuels profit beat

By Michael Erman and Manas Mishra

(Reuters) -Merck & Co on Thursday reported quarterly profit and sales that beat estimates and raised its full-year forecasts on strong demand for top-selling cancer drug Keytruda, its Gardasil vaccine and COVID-19 antiviral pill molnupiravir.

The U.S. drugmaker’s shares rose 1.8% to $85.90 before the opening bell as revenue rose 50% to $15.9 billion, with most of the growth coming from sales of molnupiravir, which was approved in November.

Analysts had expected sales of $14.7 billion, according to Refinitiv data. Excluding molnupiravir sales, revenue grew 19% in the first quarter.

The company now expects molnupiravir sales of between $5 billion to $5.5 billion, a cut to the upper end of its previous range of $5 billion to $6 billion.

“We have the capacity to supply more to the market and it really depends with what happens with the pandemic. It depends on whether we do see more outbreaks, new variants,” Chief Financial Officer Caroline Litchfield told Reuters.

Merck has shipped 6.4 million courses of the drug and data suggests it has been used by roughly 500,000 patients globally so far, executives said on a post-earnings conference call.

Robust sales will help Merck’s acquisition plans as it looks to diversify before Keytruda’s loss of exclusivity in 2028, said Millie Gray, analyst at Informa Pharma Intelligence.

Sales of Merck’s cancer immunotherapy Keytruda rose 23% to $4.8 billion, about $300 million more than analysts had forecast.

Gardasil, which prevents cancers linked to human papillomavirus, brought in $1.46 billion in the quarter, around $200 million more than Wall Street estimates, thanks to strong demand especially from China, Merck said.

Molnupiravir sales stood at $3.2 billion, topping analyst estimates by around $100 million.

Enthusiasm for the pill, developed with Ridgeback Biotherapeutics, has waned since it was shown to be about 30% effective in reducing hospitalizations, far lower than a rival antiviral therapy from Pfizer Inc.

Excluding one-time items, Merck earned $2.14 a share, easily topping analysts’ average estimate of $1.83.

The drugmaker raised its forecast for annual profit to $7.24 to $7.36 per share and sales to $56.9 billion to $58.1 billion, from its previous view of $7.12 to $7.27 a share and revenue of $56.1 billion to $57.6 billion.

(Reporting by Michael Erman, additional reporting by Manas Mishra; Editing by Bill Berkrot, Arun Koyyur, Alexandra Hudson)

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