Merck & Co. lifts annual guidance as Q1 sales of Keytruda surge 55 percent

Headline results for the first quarter:

Pharmaceutical product sales

$9.7 billion

+8%

Revenue

$10.8 billion (forecasts of $10.5 billion)

+8%

Profit

$2.9 billion

Versus $736 million

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"Our strong start to 2019, with double-digit sales and [earnings per share] growth in the first quarter, demonstrates our execution across all aspects of our business and the strength of our key growth pillars, including oncology and vaccines," remarked CEO Kenneth Frazier

Merck & Co. noted that the prior-year period included a charge of $1.4 billion related to the formation of a collaboration with Eisai for the tyrosine kinase inhibitor Lenvima.

Other results:

  • Keytruda: $2.3 billion, up 55 percent, in line with estimates, boosted by "strong momentum" for the treatment of patients with non-small-cell lung cancer
  • Januvia/Janumet: $1.4 billion, down 5 percent, as a result of continuing pricing pressure in the US
  • Gardasil/Gardasil 9: $838 million, up 27 percent, mainly due to the ongoing commercial launch in China, beating estimates by about $25 million
  • Proquad/M-M-R II/Varivax: $496 million, up 27 percent, topping forecasts of $410 million, driven by government tenders in Latin America and higher demand in Europe and the US
  • Bridion: $255 million, up 25 percent
  • Isentress: $255 million, down 9 percent
  • Zetia/Vytorin: $238 million, down 50 percent, hit by generic competition
  • Sales in China: $725 million, up 58 percent

Looking ahead:

Merck now expects sales in 2019 of between $43.9 billion and $45.1 billion, lifted from an earlier range of $43.2 billion to $44.7 billion. Meanwhile, earnings per share are seen between $4.67 and $4.79, raised from a prior forecast of $4.57 to $4.72. Analysts predict annual sales of $44.5 billion, on earnings of $4.68 per share.

According to the drugmaker, lung cancer accounted for about 65 percent of Keytruda's US sales, although the therapy is also authorised in other indications, including most recently in combination with Pfizer's tyrosine kinase inhibitor Inlyta (axitinib) as a first-line treatment for patients with advanced renal cell carcinoma. "We are feeling very excited about the opportunities outside of lung," Merck chief commercial officer Frank Clyburn said.

The company added that under a new global restructuring programme focused on streamlining its manufacturing and supply network, it will record charges of approximately $500 million in 2019. The plan is expected to be completed by the end of 2023, with total charges related to the programme of approximately $800 million to $1.2 billion. Merck explained that about 55 percent of the costs will relate to "employee separation expense and facility shut-down."

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