Merck's Q3 Surprise: Strong Results, but Gardasil Stumbles in China

Merck's third-quarter earnings report offered a mix of positive surprises and lingering concerns, with the pharmaceutical giant posting better-than-expected results overall but continuing to grapple with a decline in Gardasil sales in China. The company's strong performance across most of its portfolio was offset by the persistent issue with its HPV vaccine, raising questions about its long-term growth prospects.

Merck's Q3 results, released on November 14, 2024, showed resilience despite the ongoing challenges with Gardasil in China. The company reported a 7% overall revenue increase to $16.1 billion, driven by robust performances from Keytruda and Winrevair. Keytruda sales rose 16% to $7.3 billion, accounting for 45% of total revenue. Winrevair, a new PAH treatment, generated $70 million in its first quarter, exceeding analyst expectations.

Despite these strong performances, Gardasil's sales continued to decline in China, with a 1% year-over-year increase to $2.48 billion. The decline in China offset growth in other regions, as the company attributed the drop to a "significant step down" in shipments by its Chinese partner, Zhifei, and an anti-bribery drive in the country. Merck's CEO Rob Davis acknowledged the issue, stating that the company is working closely with Zhifei to understand and address the situation.

The decline in Gardasil sales in China is a significant concern for Merck, given that the Chinese market accounts for 60-70% of the vaccine's international sales. The anti-bribery and anti-corruption drive in China, coupled with Zhifei's reduced promotional efforts, has contributed to the sales decline. However, Merck remains optimistic about Gardasil's long-term prospects in China, citing a large unvaccinated population and plans to expand to the male population.


Merck's diverse pipeline and strong performance from other products help offset the Gardasil sales decline, ensuring the company's growth prospects remain intact. The company's adjusted 2024 sales estimate of $63.4-$64.4 billion reflects its resilience and ability to navigate short-term challenges. As Merck continues to address the issues with Gardasil in China and capitalize on market opportunities, investors can remain confident in the company's long-term growth potential.


In conclusion, Merck's Q3 results were a mixed bag, with strong performances from Keytruda and Winrevair offsetting the ongoing decline in Gardasil sales in China. While the company faces short-term challenges with its HPV vaccine, its diverse pipeline and robust financial performance provide a solid foundation for long-term growth. As Merck works to address the issues with Gardasil in China and capitalize on market opportunities, investors can remain optimistic about the company's prospects.