By Michael Erman and Mariam Sunny
(Reuters) -Merck said on Tuesday it would not ship its HPV vaccine Gardasil in China until at least the middle of this year due to weak discretionary spending, a move that dented its full-year forecast and sent shares tumbling 11% in early trading.
Gardasil, which prevents cancers caused by the human papillomavirus (HPV), has been one of Merck’s top growth drivers aside from Keytruda, and much of its international growth had come from China before sales of the shot slowed significantly since the second quarter of 2024.
“Like many other companies, we’ve seen increased pressure on discretionary consumer spending, including across the vaccine space more broadly, and demand for Gardasil has not recovered to the level we had expected,” CEO Rob Davis said in remarks prepared for the company’s conference call.
Merck said it had stopped Gardasil shipments to China from this month. The company has previously said China’s anti-bribery and anti-corruption drive had also hurt sales of the vaccine.
“We believe China still represents a significant long-term opportunity for Gardasil given the large number of females, and now males … that are not yet immunized,” Davis said.
Merck’s Gardasil sales fell short of expectations in the fourth quarter, and the company pulled its long-term target of $11 billion in Gardasil sales by 2030 in light of the decision to stop shipments to China.
Merck’s shares fell to $88.52 in early trading, putting it on track to lose nearly $30 billion in market capitalization if losses hold through the end of trading.
“Management credibility takes a bit of a hit here as they seem to be having a tough time forecasting what is going on with Gardasil in China,” said James Harlow, senior vice president at Novare Capital Management.
The company forecast total revenue of $64.1 billion to $65.6 billion for 2025, which also missed analysts’ average estimate of $67.3 billion, according to data compiled by LSEG.
Merck expects to earn $8.88 to $9.03 per share this year, compared with analysts estimates of $9.03 a share.
Quarterly Gardasil sales of $1.55 billion missed Wall Street’s estimates of around $1.8 billion, which has been pared back nearly 20% since the issues in China were disclosed last summer.
Still, sales of Keytruda, the world’s top-selling prescription medicine, more than offset that shortfall. The company sold over $7.8 billion worth of the drug in the quarter, compared with analyst forecasts of around $7.4 billion.
Total revenue rose to $15.6 billion from $14.6 billion, and came in slightly ahead of analysts expectations of $15.5 billion.
The drugmaker earned $4.37 billion, or $1.72 a share, in the quarter, excluding one-time items. Analysts had expected a profit of $1.62 a share.
(Reporting by Michael Erman in New York and Mariam Sunny in Bengaluru; Editing by Lincoln Feast, Savio D’Souza and Nick Zieminski)
