- Total Worldwide Sales Were $16.7 Billion, an Increase of 4% From Third Quarter 2023; Excluding the Impact of Foreign Exchange, Growth Was 7%
- KEYTRUDA Sales Grew 17% to $7.4 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 21%
- WINREVAIR Sales Were $149 Million; U.S. Launch of WINREVAIR Gaining Momentum; Received Approval in the EU
- Animal Health Sales Grew 6% to $1.5 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 11%
- GAAP EPS Was $1.24; Non-GAAP EPS Was $1.57; GAAP and Non-GAAP EPS Include a Net Charge of $0.79 per Share Related to Certain Business Development Transactions
- Achieved Significant Milestones in Vaccine Programs
- CAPVAXIVE Recommended by the CDC’s ACIP for Pneumococcal Vaccination in Adults 50 Years of Age and Older
- Presented Positive Results From Clinical Studies Evaluating Clesrovimab (MK-1654), an Investigational RSV Preventative Monoclonal Antibody for Infants Entering Their First RSV Season
- Data Presented for Four Approved Medicines and Six Pipeline Candidates in More Than 20 Types of Cancer at ESMO Congress 2024, Including Overall Survival Data From KEYNOTE-522 and KEYNOTE-A18
- Completed Acquisition of Investigational B-Cell Depletion Therapy, CN201 (MK-1045), From Curon Biopharmaceutical
- Full-Year 2024 Financial Outlook
- Narrows Expected Worldwide Sales Range To Be Between $63.6 Billion and $64.1 Billion
- Now Expects Non-GAAP EPS To Be Between $7.72 and $7.77; Outlook Reflects a Net Negative Impact of $0.24 per Share Related to Business Development Transactions With Curon Biopharmaceutical and Daiichi Sankyo
RAHWAY, N.J.--(BUSINESS WIRE)--Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the third quarter of 2024.
“Our third-quarter results were strong, as we continue to make progress heading into 2025 and beyond,” said Robert M. Davis, chairman and chief executive officer, Merck. “Our pipeline is advancing and expanding, demonstrating our success in creating a sustainable innovation engine, and positioning Merck with a more diversified portfolio to drive growth. I continue to remain confident in the strength of our business and our ability to execute, and I want to thank our colleagues across the globe for their focus and commitment as we work to create lasting value for patients, shareholders and all our stakeholders.”
Financial Summary
$ in millions, except EPS amounts | Third Quarter | |||
2024 | 2023 | Change | Change Ex- | |
Sales | $16,657 | $15,962 | 4% | 7% |
GAAP net income1 | 3,157 | 4,745 | -33% | -30% |
Non-GAAP net income that excludes certain items1,2* | 3,985 | 5,427 | -27% | -23% |
GAAP EPS | 1.24 | 1.86 | -33% | -30% |
Non-GAAP EPS that excludes certain items2* | 1.57 | 2.13 | -26% | -23% |
*Refer to table on page 7. | ||||
In the third quarter of 2024, total worldwide sales were $16.7 billion, an increase of 4% compared with the third quarter of 2023; excluding the impact of foreign exchange, growth was 7%. Sales growth in the third quarter of 2024 was primarily due to increased usage of KEYTRUDA globally, contributions from new launches, including WINREVAIR and CAPVAXIVE, and strong growth in Merck’s Animal Health business. Revenue growth in the third quarter of 2024 was partially offset by lower sales of JANUVIA and JANUMET, lower combined sales of GARDASIL/GARDASIL 9 and lower sales of LAGEVRIO. Third-quarter GARDASIL/GARDASIL 9 sales declined year-over-year due to reduced demand in China; outside of China, the company achieved double-digit sales growth for GARDASIL/GARDASIL 9 in almost every major region globally.
For the third quarter of 2024, Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) assuming dilution was $1.24 and non-GAAP EPS was $1.57. The declines in GAAP and Non-GAAP EPS in the third quarter of 2024 versus the prior year were largely due to a net charge of $0.79 per share in the aggregate for the acquisition of Eyebiotech Limited (EyeBio) and a related development milestone, the acquisition of CN201 (now known as MK-1045) from Curon Biopharmaceutical (Curon), as well as a payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement. There were no significant business development transaction charges in the third quarter of 2023.
Non-GAAP EPS in both periods excludes acquisition- and divestiture-related costs, costs related to restructuring programs, as well as income and losses from investments in equity securities.
Year-to-date results can be found in the attached tables.
Third-Quarter Sales Performance
The following table reflects sales of the company’s top products and significant performance drivers.
| Third Quarter | ||||
$ in millions | 2024 | 2023 | Change | Change | Commentary |
Total Sales | $16,657 | $15,962 | 4% | 7% | Approximately 2 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases, consistent with practice in that market. |
Pharmaceutical | 14,943 | 14,263 | 5% | 8% | Increase driven by growth in oncology and cardiovascular, partially offset by declines in diabetes, vaccines and virology. |
KEYTRUDA | 7,429 | 6,338 | 17% | 21% | Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer (TNBC), renal cell carcinoma (RCC) and non-small cell lung cancer (NSCLC), as well as continued strong global demand from metastatic indications. Approximately 3 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases. |
GARDASIL/GARDASIL 9 | 2,306 | 2,585 | -11% | -10% | Decline primarily due to lower demand in China compared with prior year, partially offset by higher sales in the U.S., driven by public-sector buying patterns, higher pricing and demand, as well as higher demand in most international regions. |
PROQUAD, M-M-R II and VARIVAX | 703 | 713 | -1% | -1% | Decline primarily due to timing of shipments and lower tenders in Latin America, largely offset by higher demand in certain international markets. |
JANUVIA/JANUMET | 482 | 835 | -42% | -38% | Decline primarily due to lower pricing in the U.S., as well as ongoing generic competition in many international markets. |
BRIDION | 420 | 424 | -1% | 0% | Relatively flat compared with prior year due to generic competition in certain international markets, particularly in Europe and Japan, largely offset by higher demand and pricing in the U.S. |
LAGEVRIO | 383 | 640 | -40% | -36% | Decline primarily due to lower demand in Japan, partially offset by uptake from commercial launch in the U.S. |
Lynparza* | 337 | 299 | 13% | 13% | Growth primarily due to higher global demand. |
Lenvima* | 251 | 260 | -3% | -4% | Decline primarily due to timing of shipments in China in the prior year, partially offset by higher demand in the U.S. |
VAXNEUVANCE | 239 | 214 | 12% | 13% | Growth largely driven by continued uptake from launches in Europe and Japan, partially offset by lower demand in the U.S. due to competition. |
PREVYMIS | 208 | 157 | 32% | 36% | Growth primarily due to higher global demand, particularly in the U.S. |
ROTATEQ | 193 | 156 | 24% | 25% | Growth primarily due to public-sector buying patterns in the U.S. and timing of shipments in China. |
WINREVAIR | 149 | - | - | - | Represents continued uptake since launch in the U.S. in the second quarter. |
WELIREG | 139 | 54 | 156% | 157% | Growth primarily driven by higher demand in the U.S., largely attributable to ongoing uptake of a new indication. |
Animal Health | 1,487 | 1,400 | 6% | 11% | Growth primarily driven by higher demand and pricing for both Companion Animal and Livestock product portfolios, as well as sales related to July 2024 acquisition of Elanco aqua business. Approximately 2 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases. |
Livestock | 886 | 874 | 1% | 7% | Growth primarily driven by higher pricing and higher demand for poultry and swine products, as well as sales related to acquisition of Elanco aqua business. |
Companion Animal | 601 | 526 | 14% | 17% | Growth primarily driven by uptake from new product launches, including the injectable formulation of BRAVECTO in certain international markets, as well as higher pricing across product portfolio. Sales of BRAVECTO were $266 million and $235 million in current and prior year quarters, respectively, which represented growth of 13%, or 16% excluding impact of foreign exchange. |
Other Revenues** | 227 | 299 | -24% | -22% | Decline primarily due to lower payments received for out-licensing arrangements and lower royalty income. |
*Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs. | |||||
Third-Quarter Expense, EPS and Related Information
The table below presents selected expense information.
$ in millions | GAAP | Acquisition- | Restructuring | (Income) | Non- |
Third Quarter 2024 | |||||
Cost of sales | $4,080 | $639 | $192 | $- | $3,249 |
Selling, general and administrative | 2,731 | 43 | 31 | - | 2,657 |
Research and development | 5,862 | 24 | - | - | 5,838 |
Restructuring costs | 56 | - | 56 | - | - |
Other (income) expense, net | (162) | (27) | - | 58 | (193) |
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Third Quarter 2023 |
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Cost of sales | $4,264 | $552 | $33 | $- | $3,679 |
Selling, general and administrative | 2,519 | 17 | 40 | - | 2,462 |
Research and development | 3,307 | 10 | - | - | 3,297 |
Restructuring costs | 126 | - | 126 | - | - |
Other (income) expense, net | 126 | (24) | - | 17 | 133 |
GAAP Expense, EPS and Related Information
Gross margin was 75.5% for the third quarter of 2024 compared with 73.3% for the third quarter of 2023. The increase was primarily due to the favorable impact of product mix (including lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9), partially offset by higher restructuring costs (primarily reflecting asset impairment charges), as well as higher amortization of intangible assets.
Selling, general and administrative (SG&A) expenses were $2.7 billion in the third quarter of 2024, an increase of 8% compared with the third quarter of 2023. The increase was primarily due to higher administrative, promotional, selling, and acquisition-related costs, partially offset by the favorable impact of foreign exchange.
Research and development (R&D) expenses were $5.9 billion in the third quarter of 2024, an increase of 77% compared with the third quarter of 2023. The increase was primarily due to a charge of $1.35 billion for the acquisition of EyeBio and a $100 million charge for a related development milestone, as well as a charge of $750 million to acquire CN201 (MK-1045) from Curon. The increase in R&D expenses was also driven by higher compensation and benefit costs, as well as higher clinical development spending. The increase in R&D expenses was partially offset by the favorable impact of foreign exchange.
Other (income) expense, net, was $162 million of income in the third quarter of 2024 compared with $126 million of expense in the third quarter of 2023. The favorability was primarily due to a $170 million payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement, lower exchange losses and lower net interest expense.
The effective tax rate of 22.7% for the third quarter of 2024 includes a 7.2 percentage point combined unfavorable impact related to the EyeBio and Curon transactions.
GAAP EPS was $1.24 for the third quarter of 2024 compared with $1.86 for the third quarter of 2023. GAAP EPS in the third quarter of 2024 includes a net charge of $0.79 per share in the aggregate for the EyeBio, Curon and Daiichi Sankyo transactions. There were no significant business development transaction charges in the third quarter of 2023.
Non-GAAP Expense, EPS and Related Information
Non-GAAP gross margin was 80.5% for the third quarter of 2024 compared with 77.0% for the third quarter of 2023. The increase was primarily due to the favorable impact of product mix (including lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9).
Non-GAAP SG&A expenses were $2.7 billion in the third quarter of 2024, an increase of 8% compared with the third quarter of 2023. The increase was primarily due to higher administrative, promotional and selling costs, partially offset by the favorable impact of foreign exchange.
Non-GAAP R&D expenses were $5.8 billion in the third quarter of 2024, an increase of 77% compared with the third quarter of 2023. The increase was primarily due to a charge of $1.35 billion for the acquisition of EyeBio and a $100 million charge for a related development milestone, as well as a charge of $750 million to acquire CN201 (MK-1045) from Curon. The increase in R&D expenses was also driven by higher compensation and benefit costs, as well as higher clinical development spending. The increase in R&D expenses was partially offset by the favorable impact of foreign exchange.
Non-GAAP other (income) expense, net, was $193 million of income in the third quarter of 2024 compared with $133 million of expense in the third quarter of 2023. The favorability was primarily due to a $170 million payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement, lower exchange losses and lower net interest expense.
The non-GAAP effective tax rate of 21.9% for the third quarter of 2024 includes a 6.0 percentage point combined unfavorable impact related to the EyeBio and Curon transactions.
Non-GAAP EPS was $1.57 for the third quarter of 2024 compared with $2.13 for the third quarter of 2023. Non-GAAP EPS in the third quarter of 2024 includes a net charge of $0.79 per share in the aggregate for the EyeBio, Curon and Daiichi Sankyo transactions. There were no significant business development transaction charges in the third quarter of 2023.
A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows.
Third Quarter | ||
$ in millions, except EPS amounts | 2024 | 2023 |
EPS |
|
|
GAAP EPS | $1.24 | $1.86 |
Difference | 0.33 | 0.27 |
Non-GAAP EPS that excludes items listed below2 | $1.57 | $2.13 |
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Net Income |
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GAAP net income1 | $3,157 | $4,745 |
Difference | 828 | 682 |
Non-GAAP net income that excludes items listed below1,2 | $3,985 | $5,427 |
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Excluded Items: |
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Acquisition- and divestiture-related costs3 | $679 | $555 |
Restructuring costs | 279 | 199 |
Loss from investments in equity securities | 58 | 17 |
Decrease to net income | 1,016 | 771 |
Estimated income tax (benefit) expense | (188) | (89) |
Decrease to net income | $828 | $682 |
Pipeline and Portfolio Highlights
In the third quarter, Merck continued to develop and augment its strong, diverse pipeline and achieve key regulatory and clinical milestones.
In cardiovascular disease, Merck continued to build on positive momentum in its U.S. launch of WINREVAIR. As of the end of September 2024, more than 3,700 patients have been prescribed WINREVAIR. The company also received the European Commission’s (EC) approval of WINREVAIR, in combination with other pulmonary arterial hypertension (PAH) therapies, for the treatment of adult patients with PAH with World Health Organization (WHO) functional Class II to III. WINREVAIR is the first activin signaling inhibitor approved for the treatment of PAH in Europe. WINREVAIR has launched in Germany and Merck is working to obtain reimbursement for WINREVAIR in other countries in the EU, which should occur in most other major European markets in the second half of 2025.
In oncology, Merck continued to reinforce its leadership in women’s and earlier stages of cancers and demonstrate progress in its research pipeline. At the European Society for Medical Oncology (ESMO) Congress 2024, three of the company’s data presentations were highlighted during Presidential Symposium sessions. These included overall survival (OS) data from the Phase 3 KEYNOTE-522 trial in high-risk, early-stage TNBC and from the Phase 3 KEYNOTE-A18 trial (also known as ENGOT-cx11/GOG-3047) in high-risk, locally advanced cervical cancer. In addition, new positive data on investigational candidates from Merck’s pipeline were presented, including for patritumab deruxtecan (HER3-DXd), an antibody-drug conjugate (ADC) being developed in collaboration with Daiichi Sankyo, and for sacituzumab tirumotecan (sac-TMT), an anti-TROP2 ADC being developed in collaboration with Kelun-Biotech.
The company also achieved several regulatory milestones, including new approvals for KEYTRUDA-based regimens in the U.S., Europe and Japan. In addition, Merck recently announced top-line results from the KEYNOTE-689 trial, which marks the first positive trial in two decades for patients with resected, locally advanced head and neck squamous cell carcinoma (LA-HNSCC).
In vaccines, the CDC’s Advisory Committee on Immunization Practices (ACIP) voted in October 2024 to recommend CAPVAXIVE for individuals 50 to 64 years of age. This decision expanded upon the initial unanimous recommendation in June 2024 for use of CAPVAXIVE in adults age 65 and older, among other cohorts.
At IDWeek 2024, Merck presented positive results from the Phase 2b/3 trial of clesrovimab (MK-1654), an investigational respiratory syncytial virus (RSV) preventative monoclonal antibody for infants. These results support the potential for clesrovimab to become the first and only single-dose immunization designed to protect infants with the same dose, regardless of weight, for the duration of their first RSV season (six months).
In immunology, long-term efficacy and safety data for tulisokibart (MK-7240), an investigational humanized monoclonal antibody directed to a novel target, tumor necrosis factor (TNF)-like cytokine 1A (TL1A), from the Phase 2 ARTEMIS-UC and APOLLO-CD studies in ulcerative colitis (UC) and Crohn’s disease (CD), were presented at the United European Gastroenterology (UEG) Week 2024 Congress. Both studies showed that, at week 50, maintenance of treatment efficacy was generally observed in 12-week induction responders. Phase 3 studies in UC and CD are ongoing.
In addition, Merck continued to expand and diversify its pipeline by securing strategic business development opportunities. Merck completed its acquisition of CN201 (MK-1045), a next-generation CD3xCD19 bispecific antibody with potential applications in B-cell malignancies and autoimmune diseases, from Curon. Merck also announced the expansion of the global development and commercialization agreement with Daiichi Sankyo to include MK-6070, an investigational delta-like ligand 3 (DLL3) targeting T-cell engager. The companies are planning to evaluate MK-6070 in combination with ifinatamab deruxtecan (I-DXd) in certain patients with small cell lung cancer (SCLC), as well as other potential combinations.
Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows.
Oncology | FDA Approved KEYTRUDA Plus Pemetrexed and Platinum Chemotherapy as First-Line Treatment for Adult Patients With Unresectable Advanced or Metastatic Malignant Pleural Mesothelioma, Based on Results From Phase 3 KEYNOTE-483/CCTG IND.227 Trial | |
EC Approved KEYTRUDA Plus Padcev as First-Line Treatment of Unresectable or Metastatic Urothelial Carcinoma in Adults, Based on Results From Phase 3 KEYNOTE-A39/EV-302 Trial | ||
KEYTRUDA Received 30th Approval From EC With Two New Indications in Gynecologic Cancers, Based on Results From Phase 3 KEYNOTE-868/NRG-GY018 and KEYNOTE-A18 Trials | ||
KEYTRUDA Received New Approvals in Japan for Certain Patients With NSCLC, Based on Results From Phase 3 KEYNOTE-671 Trial, and for Radically Unresectable Urothelial Carcinoma, Based on Results From Phase 3 KEYNOTE-A39/EV-302 and Phase 2 KEYNOTE-052 Trials | ||
KEYTRUDA Plus Chemotherapy Before Surgery and Continued as Single Agent After Surgery Reduced Risk of Death by More Than One-Third (34%) Versus Neoadjuvant Chemotherapy in High-Risk, Early-Stage TNBC, Based on Results From Phase 3 KEYNOTE-522 | ||
KEYTRUDA Plus Chemoradiotherapy (CRT) Reduced Risk of Death by 33% Versus CRT Alone in Patients With Newly Diagnosed, High-Risk, Locally Advanced Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18/ENGOT-cx11/GOG-3047 Trial | ||
KEYTRUDA Ten-Year Data Demonstrated Sustained OS Benefit Versus Ipilimumab in Advanced Melanoma, Based on Results From Phase 3 KEYNOTE-006 Trial | ||
KEYTRUDA Plus Lenvima in Combination With Transarterial Chemoembolization (TACE) Significantly Improved Progression-Free Survival Compared to TACE Alone in Patients With Unresectable, Non-Metastatic Hepatocellular Carcinoma, Based on Results From Phase 3 LEAP-012 Trial | ||
KEYTRUDA Plus Trastuzumab and Chemotherapy Significantly Improved OS Versus Trastuzumab and Chemotherapy Alone in First-Line Treatment of Patients With HER2-Positive Advanced Gastric or GEJ Adenocarcinoma, Based on Results From Phase 3 KEYNOTE-811 Trial | ||
KEYTRUDA Met Primary Endpoint of Event-Free Survival as Perioperative Treatment Regimen in Patients With Resected, LA-HNSCC, Based on Results From Phase 3 KEYNOTE-689 Trial | ||
Patritumab Deruxtecan (HER3-DXd) Demonstrated Statistically Significant Improvement in Progression-Free Survival Versus Doublet Chemotherapy in Patients With Locally Advanced or Metastatic EGFR-Mutated NSCLC, Based on Results From Phase 3 HERTHENA-Lung02 Trial | ||
Ifinatamab Deruxtecan Continued to Demonstrate Promising Objective Response Rates in Patients With Extensive-Stage SCLC, Based on Results From Phase 2 IDeate-Lung01 Trial | ||
Merck and Moderna Initiated Phase 3 Trial Evaluating Adjuvant V940 (mRNA-4157) in Combination With KEYTRUDA After Neoadjuvant KEYTRUDA and Chemotherapy in Patients With Certain Types of NSCLC | ||
Merck Initiated Phase 3 Shorespan-007 Trial for Bomedemstat, an Investigational Candidate for the Treatment of Certain Patients With Essential Thrombocythemia | ||
Merck and Daiichi Sankyo Initiated Phase 3 IDeate-Lung02 Trial of Ifinatamab Deruxtecan in Patients With Relapsed SCLC | ||
Merck and Exelixis Signed Clinical Development Collaboration To Evaluate Investigational Zanzalintinib in Combination With KEYTRUDA in Head and Neck Cancer and in Combination With WELIREG in RCC | ||
Vaccines | Clesrovimab (MK-1654), an Investigational RSV Preventative Monoclonal Antibody, Significantly Reduced Incidence of RSV Disease and Hospitalization in Healthy Preterm and Full-Term Infants, Based on Results From Phase 2b/3 MK-1654-004 Trial | |
CDC’s ACIP Recommended CAPVAXIVE for Pneumococcal Vaccination in Adults 50 Years of Age and Older | ||
CAPVAXIVE Demonstrated Positive Immune Responses in Adults With Increased Risk for Pneumococcal Disease, Based on Results From Phase 3 STRIDE-8 Trial | ||
Merck Announced Positive Top-line Results From Phase 3 Trial Evaluating Efficacy and Safety of GARDASIL 9 in Japanese Males | ||
Cardiovascular | EC Approved WINREVAIR in Combination With Other PAH Therapies for the Treatment of PAH in Adult Patients With Functional Class II-III, Based on Results From Phase 3 STELLAR Trial | |
Immunology | Merck Presented New Long-Term Data for Tulisokibart (MK-7240), an Investigational Anti-TL1A Monoclonal Antibody, in Inflammatory Bowel Disease at UEG Week 2024 | |
Infectious Diseases | Merck and Gilead Announced Phase 2 Data Showing a Treatment Switch to an Investigational Oral Once-Weekly Combination Regimen of Islatravir and Lenacapavir (MK-8591D) Maintained Viral Suppression in Adults at Week 48 | |
Ophthalmology | Merck and EyeBio Initiated Phase 2b/3 Clinical Trial for MK-3000 for the Treatment of Diabetic Macular Edema |
Contacts
Media Contacts:
Robert Josephson
(203) 914-2372
robert.josephson@merck.com
Michael Levey
(215) 872-1462
michael.levey@merck.com
Investor Contacts:
Peter Dannenbaum
(732) 594-1579
peter.dannenbaum@merck.com
Steven Graziano
(732) 594-1583
steven.graziano@merck.com
