Gardasil posts big Q1 beat to push Merck vaccines to 21% growth

Merck’s vaccines powered ahead to start the year, helping the drug giant offset other areas of weakness on the way to slight growth overall. Led by HPV vaccine franchise Gardasil and pneumococcal shot Pneumovax 23, Merck’s vaccine sales grew 21% in the first quarter to $1.5 billion.

Gardasil was the standout performer for the period, increasing sales 41% to $532 million and handily surpassing analyst estimates of $361 million, according to Barclays.

A handful of factors played in the significant beat, the drugmaker reported, including the timing of CDC purchasing, strong demand and increased prices. The company is enjoying higher than 90% market share around the world with its vaccine, and nearly 100% of share in the U.S., Merck’s president of global human health, Adam Schechter, told analysts on a conference call.

Speaking with analysts on Tuesday, Schechter said Gardasil benefited from about $45 million in CDC purchases and $50 million in European sales that would have previously been recorded by the company’s former JV with Sanofi. That partnership ended in 2016.

"Outside of those two things, I would say demand remains strong, and we continue to see increased penetration rates, not just in males, but even in females as well," Schechter said on Tuesday’s call. However, he cautioned that the company still faces a "negative impact" of the CDC’s decision to recommend a two-dose HPV vaccination schedule last year instead of the previous three-dose regimen. It remains to be seen how much that switch will impact Gardasil sales going forward.

Merck could also be benefiting from rival GlaxoSmithKline’s decision to pull its own HPV shot, Cervarix, from the U.S. last year. That move handed Merck the entire market.

But Gardasil wasn’t the only vaccine posting strong growth for the quarter. Rotavirus vaccine RotaTeq increased sales 19% to $224 million, while pneumococcal shot Pneumovax 23 grew sales 52% to $163 million and shingles vaccine Zostavax jumped 23% to $154 million.

Sales of Proquad and other MMR/varicella vaccines stayed flat at $355 million.

After a strong finish last year, Gardasil’s Street-beating quarter is starting to look like a pattern. The vaccine turned in $542 million in sales compared to a $452 million consensus estimate for the fourth quarter and beat consensus estimates by more than $200 million in the third quarter.

As top drugmakers work through a range of challenges, vaccines are looking more and more reliable as pharma companies report first-quarter earnings. Sanofi’s vaccines sales increased by 13.2% on the period, while GSK’s vaccine outfit jumped ahead by 16% over last year. Pfizer vaccines, for their part, continue to suffer from a Prevnar slowdown and fell by 7% versus 2016.