'Unprecedented' demand for Merck's Gardasil drives monster Q3

Merck’s Gardasil has been propelling the pharma giant’s vaccine unit in recent quarters, and that doesn't look like it'll be changing. The company sees more growth ahead thanks to an "unprecedented increase in worldwide demand" for HPV vaccines, an executive said.

In the third quarter, Merck’s Gardasil franchise generated (PDF) $1.05 billion in global sales, a 55% increase over last year’s third quarter, when the franchise pulled in $675 million. Part of the growth came from sales to the CDC's stockpile, the company noted, but higher demand around the world—including in Europe and China—also played a role.

Addressing the vaccine's performance on a recent conference call, Merck’s president of global human health Adam Schechter said the company is "seeing unprecedented increase in worldwide demand for the HPV vaccines." He said global demand has "doubled in the last year alone."

"Gardasil is increasingly viewed as an anti-cancer vaccine for certain HPV-related cancers," Schechter said. "Countries like Australia have increased vaccination rates to levels that could potentially help obtain the goal of cervical cancer elimination, driving demand and awareness as well as serving as a model for others."

RELATED: With nod in older adults, Merck drives HPV shot Gardasil 9 into big new market

Policy changes in Gavi countries are also driving demand, Schechter said, and a launch in China is chipping in, too. Aside from new demand outside of the U.S., Merck recently secured a U.S. label expansion in people aged 27 to 45. Previously, the vaccine had been approved for people aged 9 to 26.  Together, the factors lead Schechter to believe that growth for the vaccine "will continue to be very, very strong."

The lofty statements led Wolfe Research analyst Tim Anderson to question just how high sales for the product might grow, but Merck execs didn't provide a number for potential peak sales.

To keep up with new demand, Merck has already invested to build up Gardasil manufacturing, CFO Rob Davis said on the call. The company can continue to invest to support the product going forward, he added.

RELATED: Hack forces Merck to borrow Gardasil doses from CDC stockpile, slamming Q3 sales

The strong third-quarter performance comes a year after Merck had to stop manufacturing briefly due to a cyberattack. The company had to borrow back $240 million worth of stockpiled Gardasil doses during last year's third quarter, hurting its sales for the period. Davis previously said Merck could recoup the lost sales by replenishing the CDC stockpile, according to Regulatory Focus.

All told, Merck’s vaccines generated $2.2 billion for the quarter, Schechter said, up 13% over the same period last year. While Gardasil soared, Merck’s shingles vaccine Zostavax continued to struggle due to GlaxoSmithKline’s rival rollout for Shingrix.

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