By Michael Erman
(Reuters) -Merck & Co on Thursday reported higher-than-expected results in the third quarter on surprisingly strong demand for its COVID-19 treatment, primarily in Japan, and raised its annual sales forecast for the therapy.
Sales of molnupiravir, the COVID-19 antiviral pill sold under brand name Lagevrio, jumped 47% to $640 million in the quarter, crushing Wall Street estimates of $120 million, according to LSEG data.
Molnupiravir was initially hailed as a potential breakthrough when few treatment options were available, but was soon eclipsed by Pfizer’s rival treatment Paxlovid, which had more impressive data.
Paxlovid dominates the out-of-hospital COVID-treatment market in the United States, and in the EU, the regulator recommended against use of Merck’s drug. In Japan, however, the drug has been a market leader, Merck has said previously.
Merck raised Lagevrio full-year sales forecast to $1.3 billion.
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Third-quarter sales of Merck’s top-selling cancer immunotherapy, Keytruda, stood at $6.34 billion, surpassing analysts’ average estimate of $6.22 billion.
Gardasil, its vaccine to prevent cancers caused by human papillomavirus (HPV), generated sales of $2.59 billion, rising 13% but missing analysts’ average estimate of $2.69 billion.
“As investors have come to expect a beat and raise on Keytruda, strength in Gardasil is also needed,” Wells Fargo analyst Mohit Bansal said in a note, adding that investors seem to expect more sales growth from the vaccine.
Shares of Merck were up nearly 1% in choppy premarket trading.
The company now expects 2023 sales in the range of $59.7 billion to $60.2 billion, up from its previous forecast of $58.6 billion to $59.6 billion.
The company posted sales of $15.96 billion in the reported quarter, compared to the average analyst estimate of $15.3 billion.
The U.S. drugmaker earned an adjusted profit of $2.13 per share, beating estimates of $1.95 per share.
(Reporting by Michael Erman and Leroy LeoEditing by Bill Berkrot and Shinjini Ganguli)