• Total Revenue: $15.6 billion, an increase of 7% (9% excluding foreign exchange impact).
• Human Health Sales Growth: 8%, driven primarily by oncology.
• Animal Health Sales Growth: 13%.
• KEYTRUDA Sales: $7.8 billion, a growth of 21%.
• GARDASIL Sales: $1.6 billion, a decrease of 18% due to lower demand in China.
• CAPVAXIVE Sales: $50 million.
• WINREVAIR Sales: $200 million.
• Gross Margin: 80.8%, an increase of 3.6 percentage points.
• Operating Expenses: $7.4 billion.
• Earnings Per Share (EPS): $1.72.
• 2025 Revenue Guidance: $64.1 to $65.6 billion, growth of 2% to 4% (excluding foreign exchange impact).
• 2025 EPS Guidance: $8.88 to $9.03.

• Warning! GuruFocus has detected 1 Warning Sign with MRK.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Merck & Co Inc (NYSE:MRK) achieved strong growth in 2024, driven by demand for its innovative portfolio, including KEYTRUDA and the successful launch of WINREVAIR.
• The company reached nearly 0.5 billion people with its medicines and vaccines in 2024, showcasing its global impact.
• Merck & Co Inc (NYSE:MRK) is making significant progress in its pipeline, with 20 potential new growth drivers, many with blockbuster potential.
• The Animal Health business delivered strong performance with a 13% sales growth.
• Merck & Co Inc (NYSE:MRK) has a robust late-phase pipeline with promising developments in oncology, cardiometabolic, and infectious diseases.

Negative Points

• GARDASIL sales decreased by 18% due to lower demand in China, leading to elevated inventory levels.
• Merck & Co Inc (NYSE:MRK) decided to temporarily pause GARDASIL shipments to China, impacting short-term revenue.
• The company faces challenges in the Chinese market for GARDASIL due to increased pressure on discretionary consumer spending.
• There is uncertainty regarding the timing of economic recovery in China, affecting long-term sales projections for GARDASIL.
• The Medicare Part D redesign is expected to negatively impact sales by approximately $400 million, affecting products like WINREVAIR and small molecule oncology products.

Q & A Highlights

Q: Can you provide insights on the growth expectations for WINREVAIR, given some concerns about its performance? A: Robert Davis, CEO, expressed confidence in WINREVAIR's growth potential, noting that January sales returned to expected levels. He anticipates strong growth for WINREVAIR in 2025, supported by its benefits for patients with pulmonary arterial hypertension.

Q: How does the change in GARDASIL sales projections affect Merck's M&A strategy? A: Robert Davis, CEO, stated that the long-term expectations for Merck remain unchanged, as GARDASIL was not a core growth driver post-LOE. Merck will continue to pursue business development opportunities, focusing on science and value, with a sweet spot for deals in the $0 to $15 billion range.

Q: Could you elaborate on the targets for the oral PCSK9 inhibitor and potential combinations? A: Dean Li, President of Merck Research Laboratories, mentioned that the goal is to achieve a profile similar to PCSK9 antibodies with the oral molecule, addressing the unmet need as 70% of people on statins are not at goal. Combinations with other cardiometabolic assets are being considered to enhance cardiovascular outcomes.

Q: What is the current situation with GARDASIL inventory in China, and how does it impact future shipments? A: Robert Davis, CEO, explained that Merck has paused shipments to China to allow inventory drawdown, improving Zhifei's financial position. The underlying demand remains, and the male indication is expected to support future growth. GARDASIL China now represents about 1% of Merck's total revenue.

Q: How does the recent success of WINREVAIR in trials affect expectations for its use in less severe patients? A: Dean Li, President of Merck Research Laboratories, highlighted that WINREVAIR's success in trials like ZENITH, which was stopped early for efficacy, supports its potential to change the standard of care in PAH. The HYPERION trial remains blinded, but the data will be analyzed to understand its impact on less severe patients.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.