Merck on Thursday reported third-quarter revenue and adjusted earnings that topped expectations as the company saw strong sales from its top-selling cancer drug Keytruda, recently launched treatments and its animal health business. 

But Merck’s vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S., posted another quarter of lighter-than-expected sales. Revenue from the shot, Gardasil, fell 11% compared to the year-earlier period, mainly due to lower demand in China. 

The pharmaceutical giant narrowed its full-year sales forecast to a range of $63.6 billion to $64.1 billion, from a previous guidance of $63.4 billion to $64.4 billion. 

Merck also lowered its adjusted profit guidance from a range of $7.72 to $7.77 per share, from a previous forecast of $7.94 to $8.04 per share. That updated outlook reflects a one-time charge of 24 cents per share related to business development deals with Curon Biopharmaceutical and Daiichi Sankyo. 

Shares of Merck fell more than 3% on Thursday.

Here’s what Merck reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

• Earnings per share: $1.57 adjusted vs. $1.50 expected
• Revenue: $16.66 billion vs. $16.46 billion expected

Merck posted net income of $3.16 billion, or $1.24 per share, for the third quarter. That compares with net income of $4.75 billion, or $1.86 per share, during the year-earlier period. 

Excluding acquisition and restructuring costs, Merck earned $1.57 per share for the three-month period. 

The company booked $16.66 billion in revenue for the third quarter, up 4% from the same period a year ago.

The results come as Merck shows substantial progress in preparing for Keytruda’s patent expiration in 2028. The loss of exclusive rights to the medicine will likely cause sales to fall, forcing the company to draw revenue from elsewhere.

Merck has a handful of new deals under its belt and key drug launches that will help it offset those losses. That includes Winrevair, a medication approved in the U.S. in March to treat a progressive and life-threatening lung condition. 

And Capvaxive, a vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and lung infection, was approved in the U.S. in June. 

The company’s pipeline of drugs in late-stage development has nearly tripled over the past roughly three years to more than 20 unique products, Merck CEO Rob Davis said during an earnings call on Thursday.

He said that will fuel a significant number of medicine and vaccine launches over the next five years, the majority of which will have “blockbuster-plus potential.” Blockbuster drugs rake in at least $1 billion in annual revenue.

Merck’s pharmaceutical division, which develops a wide range of drugs, booked $14.94 billion in revenue during the third quarter, up 5% from the same period a year ago.

The company’s immunotherapy drug Keytruda recorded $7.43 billion in revenue during the quarter, up 17% from the year-earlier period. Analysts had been expecting $7.33 billion in Keytruda sales, according to estimates from StreetAccount. 

That increase was driven by higher uptake of Keytruda for earlier-stage cancers and strong demand for the drug for metastatic cancers, which spread to other parts of the body. 

Gardasil brought in $2.31 billion in sales, down 11% from the third quarter of 2023. Merck said the decline was primarily due to lower demand in China compared with the year-earlier period. It was partially offset by higher sales in the U.S. 

That is below the $2.51 billion that analysts expected, according to StreetAccount. 

Davis said the company is “highly focused” on the market in China and is making progress with its commercialization partner, Zhifei, to increase promotional and patient education efforts or Gardasil. 

“We expect these efforts to translate to increased patient activation and demand, but as we’ve said, this will take time,” Davis said. 

Davis said Merck is confident in the long-term opportunity of Gardasil, with less than 10% of the eligible population worldwide vaccinated. The company expects to hit its goal of $11 billion in global sales for Gardasil by 2030. 

Winrevair posted $149 million in revenue for the third quarter following its approval in March. Analysts had expected the treatment to book $127 million in sales. 

Roughly 1,700 people received a Winrevair prescription during the quarter, bringing the total number of new patient prescriptions to 3,700 since the drug’s launch, Merck CFO Caroline Litchfield said during the call. The company estimates that roughly 80% of those patients will receive the actual drug.

The company’s Type 2 diabetes treatment, Januvia, saw $482 million in sales, down 42% from the same period a year ago. Merck said the decline was primarily due to lower prices of the drug in the U.S., along with generic competition in several countries. 

Analysts had expected the drug to rake in $610 million in sales, StreetAccount said. 

Januvia is one of 10 drugs targeted in ongoing Medicare drug price negotiations, a policy that aims to make costly medications more affordable for seniors. Those price talks, a key provision of President Joe Biden’s Inflation Reduction Act, will end at the beginning of August.

Sales of Merck’s Covid antiviral pill, Lagevrio, also fell 40% to $383 million during the quarter. 

Still, that topped analysts’ expectations of $124.2 million in sales, according to StreetAccount.  

Merck’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted $1.49 billion in sales for the third quarter. That is up 6% from the year-earlier period and slightly above what analysts surveyed by StreetAccount were expecting.