Merck Q2 Profitability Soars : Merck’s Q2 profitability improved in an essential earnings report. Keytruda and Gardasil, top-selling cancer drugs, drove this. The pharmaceutical giant reported a quarterly loss due to Prometheus Biosciences charges. The $5.98 billion loss, or $2.35 per share, was notable. Last year, net income was $3.74 billion, and earnings per share were $1.47. After charges, the quarterly loss per share was $2.06.
The loss is due to buying Prometheus, an autoimmune disease treatment business, for $10.2 billion ($4.02 per share). Merck purchased this in mid-June. Despite the deficit, Merck’s quarterly revenues increased 3% to $15.04 billion. Merck’s CEO, Robert Davis, credited oncology and vaccinations for growth.
Merck’s stock dropped 1% on Tuesday and 5% YTD—the third-largest US pharmaceutical corporation with a $267 billion market cap. From April, Merck raised its 2023 revenue projection to $58.6-59.6 billion. The business lowered its full-year adjusted earnings estimate from $6.88 to $7 per share to $2.95 to $3.05. Quarterly growth adds 24 cents/share to annual profit. The $4.02/share Prometheus charge erased the gain. Merck’s projection includes costs from the Imago BioSciences acquisition and Kelun-Biotech’s upfront payment.
Davis remains optimistic despite challenges. He predicts growth throughout the year and a 10%–11% growth rate after one-time effects. Merck’s pharmaceutical business generated $13.46 billion in revenue during the quarter, a 6% increase from the previous year. The pharmacy division’s revenues increased by 14% without Covid’s molnupiravir.
Lagevrio-branded molnupiravir sales dropped from $1.18 billion to $203 million in Q3 2022—a 78% decrease. After the epidemic, people are less interested in Covid products. Keytruda, an antibody for cancer treatment, boosted the pharmaceutical industry’s growth. Keytruda sales reached $6.27 billion, a 19% increase from the previous quarter.
Merck is developing a skin-injected version of the medicine to maintain its patent lead against Keytruda until 2028. Gardasil, a vaccine for HPV, a common STD in the U.S., sold well for Merck. Gardasil sales were $2.34 billion, up 47% from Q2 2022.
Merck’s animal health business, providing vaccinations and treatments for dogs, cats, and cattle, saw revenues decline by 1% to $1.46 billion. Investors want to know about future product launches and advancements in Merck’s medication pipeline that could help with Keytruda’s patent cliff.
Merck and Moderna’s Keytruda-tested cancer vaccine is an intriguing development for investors. The vaccine’s Phase 3 trial is getting attention. Merck is also focusing on its experimental vaccine for pneumococcal illness and pneumonia.