Merck Surpasses Expectations with Q4 Earnings, Driven by Oncology and Vaccines Growth
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Merck, the multinational pharmaceutical giant, has delivered a stellar performance in its fourth-quarter 2022 (Q4) earnings report, surpassing market expectations. Excluding non-recurring items, the company reported earnings of $0.03 per share, a remarkable $0.14 better than the estimated loss of $0.11 per share. This outstanding financial performance fueled a 4.3% surge in Merck's shares, reaching all-time highs.
The robust growth in Merck's Oncology and Vaccines divisions played a pivotal role in this buoyant result. Keytruda, a cancer drug, and Gardasil, an HPV vaccine, both experienced impressive year-over-year growth exceeding 20%. These flagship brands are anticipated to be key contributors in 2024, mitigating challenges such as foreign exchange headwinds. Despite these hurdles, Merck maintains its FY24 revenue growth outlook between a positive 4-7%.
Merck's positive financial trajectory is further supported by its healthy pipeline entering 2024. The company plans to initiate over 20 Phase 3 studies across various new classes of assets, including oncology, immunology, and cardiometabolic disease. While patent expiration poses potential challenges, particularly for Keytruda set to expire in four years, Merck's robust pipeline positions it to quickly offset any revenue impact resulting from patent loss.
The company's Q4 performance outshone some of its industry peers, including Pfizer (PFE) and Johnson & Johnson (JNJ), underscoring Merck's market strength. With a first-mover advantage in Keytruda, Merck appears poised for sustained upside in the long term.
In Q4, Merck & Co reported adjusted earnings of 3 cents per share, despite a $1.69 per share reduction to account for a $5.5 billion payout to Daiichi Sankyo for co-development rights to three cancer drugs. This exceeded analyst predictions of a loss of 11 cents per share. Q4 revenue increased to $14.6 billion from $13.8 billion the previous year, surpassing analyst expectations of $14.5 billion.
Keytruda sales experienced a notable 21% rise to $6.6 billion, driven by expanded usage in earlier stage cancers, surpassing analyst forecasts of $6.5 billion. For the full year, Keytruda generated sales of $25 billion, surpassing AbbVie's arthritis drug Humira at its peak.
Looking ahead to 2024, Merck forecasts sales between $62.7 billion and $64.2 billion, suggesting up to 6.8% year-over-year growth, surpassing analyst estimates of $63.5 billion. The company also expects earnings per share to range from $8.44 to $8.59, exceeding analyst estimates of $8.42.
In a strategic move to optimize its manufacturing operations, Merck is launching a restructuring program. Although specific details are undisclosed, the company recorded a $190 million charge to its GAAP results during Q4 related to the restructuring effort.