US pharmaceutical giant Merck (also known as Merck outside the US and Canada) released its quarterly report on Thursday, with fourth quarter revenue and adjusted profits exceeding expectations due to strong market demand for its anti-cancer drug Keytruda and HPV vaccine Gardasil.
However, the pharmaceutical giant Q4 experienced a net loss in unadjusted profits due to expenses related to its previously announced agreement with Japanese pharmaceutical company Daiichi Sankyo in October last year, aimed at jointly developing three highly sought after cancer treatment drugs.
The company's revenue in the fourth quarter of last year was 14.63 billion US dollars, an increase of 6% compared to the same period last year; Under the GAAP rules, the net loss for the quarter was $1.23 billion, or 48 cents per share. By comparison, the net profit for the same period last year was $3.02 billion, or $1.18 per share.
The cost associated with the transaction with Japanese pharmaceutical company Daiichi Sankyo is equivalent to $1.69 per share. Excluding acquisition and restructuring costs, Merck's adjusted earnings per share for the fourth quarter were 3 cents.
For the whole year, the company achieved a revenue of $60.1 billion, with earnings per share of $0.14 under GAAP rules, and adjusted earnings per share of $1.51.
Merck's stock price closed up 4.64% on Thursday.
Be proactive and continue to expand the drug portfolio
At the time of these results being announced, Merck has made significant progress in preparing for the expiration of the anti-cancer drug Keytruda patent in 2028 and has reached some new deals, with key drugs about to be launched.
Robert Davis, CEO of Merck, said the company "feels very good" about the progress it has made in expanding its drug portfolio. But at the same time, he indicated that Merck needs more products and the company is still interested in signing acquisition or cooperation agreements.
Merck also released guidelines for the entire year of 2024, which overall met expectations. The company expects its revenue to be between $62.7 billion and $64.2 billion this year, with adjusted earnings per share ranging from $8.44 to $8.59. Analysts previously estimated that Merck's full year sales for this year would be $63.52 billion, with an adjusted earnings per share of $8.42.
The adjusted profit forecast includes a one-time fee of approximately 26 cents per share generated by Merck's acquisition of Harpoon Therapeutics, a US based new T-cell cancer therapy developer, earlier this month.
Merck also announced a new restructuring plan for 2024 aimed at improving the production network of its pharmaceutical and animal health businesses. Merck's expenses related to this project in the fourth quarter were $190 million, but were not included in the adjusted performance. This resulted in Merck's total restructuring expenses for the current period reaching $401 million.
Star anti-cancer pharmaceutical industry's performance exceeded expectations
Merck's pharmaceutical business includes the development of multiple drugs in various disease fields, with revenue of $13.14 billion this quarter, an 8% increase from the same period last year. This growth is due to Keytruda, an immunotherapy used to treat various types of cancer. The drug's revenue was $6.61 billion, a 21% increase from the same period last year, exceeding the analyst's previously estimated sales of $6.41 billion.
Caroline Litchfield, Chief Financial Officer of Merck, stated that revenue from this immunotherapy has increased due to increased usage by early-stage cancer patients and strong demand for drugs from cancer patients with metastatic diseases or spreading to different parts of the body.
Merck's Gardasil vaccine for preventing HPV, which is the most common sexually transmitted infection in the United States, has also seen an increase in sales. Gardasil's sales reached $1.87 billion, a 27% increase from the fourth quarter of 2022, slightly lower than analyst expectations of $1.92 billion.
With the arrival of the post epidemic era, the external demand for COVID-19 drugs from Pfizer, Moderna and other companies has declined significantly. The sales of Merck's COVID-19 antiviral drug Lagevrio fell to 193 million dollars during this period, down 77% from the 825 million dollars reported in the fourth quarter of 2022.
Merck's Januvia, a treatment drug for type 2 diabetes, also saw its sales fall to $787 million this quarter, down 14% from the same period last year. The company stated that due to competition from low-cost generic drugs outside the United States, especially in Europe, as well as a decrease in domestic demand in the United States, sales of the drug have been reduced.
Januvia is one of the 10 drugs that is about to undergo price negotiations for medical insurance drugs. The policy is formulated under the Inflation Reduction Act, aimed at making expensive drugs more affordable for the elderly. Medical insurance companies provided preliminary quotations for each drug on Thursday.
Merck's animal health division develops vaccines and drugs for dogs, cats, and cows, with sales of $1.28 billion, a 4% increase from the same period last year. The company stated that the increasing demand for pet products such as Bravecto, a flea and tick treatment drug, has driven revenue growth in this sector.