Merck raises full-year forecasts as vaccines power profit beat

Merck & Co Inc reported higher-than-expected first-quarter profit on Tuesday on increased demand for vaccines and cancer immunotherapy Keytruda, and the U.S. drugmaker raised its 2019 earnings and revenue forecasts.Gardasil, a vaccine for preventing cancers associated with human papillomavirus, powered much of the earnings beat, helped by higher vaccination rates in Europe, while other vaccines, such as the company’s measles shot, also helped results.
Sales of Keytruda surged 55 percent to $2.27 billion. While shy of lofty Wall Street estimates of $2.33 billion, they topped Bristol-Myers Squibb’s rival drug Opdivo, which brought in $1.8 billion, for the fourth consecutive quarter.
Lung cancer accounted for 65 percent of Keytruda’s U.S. sales. But it has piled up approvals to treat several other types of cancer, including a recent U.S. approval in combination with a Pfizer drug for advanced kidney cancer.
“We are feeling very excited about the opportunities outside of lung,” Chief Commercial Officer Frank Clyburn said on a call with analysts and investors. The company said it now expects full-year adjusted earnings of $4.67 to $4.79 per share, up from its prior forecast of $4.57 to $4.72. It raised its 2019 revenue forecast to $43.9 billion to $45.1 billion from $43.2 billion to $44.7 billion.
Merck shares rose 1.3 percent to $77.80.
Gardasil sales rose 27 percent to $828 million, beating analyst expectations by about $25 million.
Sales of the company’s measles-mumps-rubella and chickenpox vaccines rose 27 percent to $496 million, helped by government tenders in Latin America and higher European and U.S. demand.
Measles cases in the United States have hit their highest level since the virus was declared eradicated in 2000, with a total of at least 705 confirmed cases so far. Merck is the sole provider of the measles-mumps-rubella vaccine.
The company said it plans a restructuring program to optimize its manufacturing and supply network and cut its real estate footprint, and expects to take related charges of $500 million in 2019.
Excluding items, Merck earned $1.22 per share, beating the analysts’ average estimate by 16 cents, according to IBES data from Refinitiv.
Net income nearly quadrupled to $2.92 billion from $736 million a year earlier, when the company had taken a $1.4 billion charge related to a collaboration deal with Japanese drugmaker Eisai Co Ltd.
Sales rose to $10.81 billion, topping Wall Street estimates of $10.48 billion
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