(Feb 3): Merck & Co forecast 2026 sales and profit that missed Wall Street’s expectations as continued challenges with its HPV vaccine Gardasil, which may remain off the market in China this year, overshadowed growth from newer drugs.
Full-year sales will be US$65.5 billion to US$67 billion, Merck said on Tuesday, below the average estimate from analysts. The company expects adjusted earnings of as much as US$5.15 a share. The stock fell as much as 3.2% in pre-market trading.
Merck has been coping with a decline in Chinese demand for its second-biggest product, the Gardasil shot that protects against cancer-causing human papillomavirus (HPV). The company didn’t assume any Gardasil shipments to China in its 2026 full-year guidance, a spokesman told Bloomberg, after previously pausing them through the end of 2025.
Gardasil is now facing additional challenges in the US, where health officials have moved to recommend fewer doses of the vaccine. In January, chief executive officer Robert Davis told investors the financial impact of the recommendation was “manageable overall” and that he was “more concerned about it from a health policy perspective”.
Merck shares have gained 7.7% this year through Monday’s close.
The uncertainty around Gardasil has been a major sore spot. Sales in the fourth quarter (4Q) were US$1.03 billion, better than analysts had feared but still a 35% year-over-year decline. Merck has placed the blame on the country’s economic decline and the chilling effects of an anti-corruption crackdown. But the shot is also facing competition from Chinese companies that sell HPV vaccines at one-tenth of Gardasil’s price.
New growth
See also: US stocks climb on solid factory report as bonds fall
The challenges are overshadowing Merck’s growth in other areas, including demand for a new pneumonia vaccine that rivals one of Pfizer Inc’s biggest products and sales of the rare lung-disease drug Winrevair.
Those products helped Merck beat 4Q revenue expectations by roughly US$200 million. Adjusted earnings for the quarter were US$2.04 per share.
Winrevair, which treats high blood pressure in arteries in the lungs, beat estimates with US$467 million in sales for the quarter. Sales of the pneumonia vaccine Capvaxive, which has the potential to leapfrog Pfizer’s shot, were also squarely ahead of estimates.
See also: US stocks muted as Warsh nomination continues to weigh on market
While Merck is entering what could be a lower policy risk year for the pharmaceutical industry at large, it’s under pressure as Health Secretary Robert F Kennedy Jr reshapes the nation’s vaccine framework. In addition to Gardasil, Merck makes ProQuad, a widely used combination shot that protects against measles, mumps, rubella and chickenpox.
In December, Merck joined competitors in striking a deal with the Trump administration to lower drug prices for some Americans in exchange for a three-year reprieve from threatened tariffs.
The company is also preparing for lower prices and generic competition for its best-selling product, the blockbuster cancer treatment Keytruda. That’s put pressure on Davis to do deals for promising new medicines. In January, amid speculation that Merck was interested in buying Revolution Medicines Inc, Davis told investors that he sees an opportunity for acquisitions worth tens of billions of dollars.
Keytruda’s patents are expected to start expiring in 2028. In September, Merck snagged US regulatory approval of a formulation that’s faster and easier to administer. The medicine, called Keytruda Qlex, is given in minutes as a shot under the skin. It’s a key component of the drugmaker’s strategy to continue reaping Keytruda’s fortunes.
US sales of Keytruda Qlex were US$35 million in the quarter, the company said, while total Keytruda sales were US$8.4 billion — beating analyst estimates.
Another Merck newcomer, Ohtuvayre, beat expectations, a positive trend for the lung disease treatment acquired through the company’s US$10 billion purchase of Verona Pharma last year. Merck has said Ohtuvayre has “multi-billion dollar” commercial potential, and that 4Q would show the beginning of the acquisition’s benefits.
Uploaded by Felyx Teoh
