Slowing Gardasil Sales Hurt MRK's Top Line: Is Recovery in the Cards?

Merck’s MRK second-largest product is Gardasil, which is a vaccine for the prevention of certain cancers caused by human papillomavirus (HPV). Though the vaccine’s sales rose consistently till 2022, it started witnessing sluggish sales from 2024.

Sales of the vaccine have been declining due to weak demand trends in China amid an economic slowdown. Gardasil sales declined 40% on a year-over-year basis to $1.33 billion in the first quarter of 2025. Gardasil declined 3% to $8.58 billion in 2024.

The lower demand in China has resulted in elevated channel inventory levels at Merck’s commercialization partner in China, Zhifei. As a result, Merck has decided to temporarily halt shipments of Gardasil in China from February through at least mid-year 2025 to allow Zhifei to move out existing inventory.

The economic headwinds in China led Merck to withdraw its previously issued long-term guidance of generating more than $11 billion in sales from Gardasil by 2030.

However, Gardasil sales are strong in almost every major region outside China, including the United States and Japan, driven by higher demand.

Merck expects global Gardasil growth, excluding China, to slow down going forward. Our model estimates for Gardasil suggest a CAGR decline of 6.4% over the next three years.

MRK's Other Vaccines & Competition in the Space

Merck markets several vaccines other than Gardasil. Besides Gardasil, it markets ProQuad/ M-M-R II/Varivax (measles, mumps, rubella and varicella virus vaccine, Vaxneuvance (pneumococcal 15-valent conjugate vaccine), RotaTeq (rotavirus vaccine), Pneumovax 23 (pneumococcal vaccine polyvalent) and its newest jab, Capvaxive (21-valent pneumococcal conjugate vaccine).

Earlier this month, the FDA approved its prophylactic long-acting monoclonal antibody, clesrovimab, for the prevention of RSV disease in newborns and infants. The product will be marketed under the brand name Enflonsia.

Enflonsia is expected to be launched in the United States ahead of the upcoming 2025-26 RSV season, while orders for the shots are expected to start in July.

However, upon its commercial launch, Enflonsia is likely to face stiff competition from AstraZeneca AZN/Sanofi’s SNY RSV antibody Beyfortus, which was also approved for a similar indication in 2023.

The AstraZeneca-Sanofi antibody, Beyfortus, achieved blockbuster status in its first full-year sales in 2024.

Besides antibodies, some other vaccines have been approved for preventing RSV in the United States. These include Pfizer’s PFE Abrysvo, and GSK’s Arexvy.

Arexvy and Abrysvo are approved by the FDA for use in all individuals aged 60 and above. Arexvy is also approved for high-risk individuals aged 50-59, while Abrysvo is approved for high-risk adults aged 18-59 as well as for infants through maternal immunization.

MRK's Price Performance, Valuation and Estimates

Year to date, shares of Merck have lost 17.8% against the industry’s increase of 2.6%.

From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.79 forward earnings, lower than 15.63 for the industry and its 5-year mean of 12.88.

The Zacks Consensus Estimate for 2025 earnings has declined from $8.96 per share to $8.92, while the same for 2026 has decreased from $9.82 to $9.73 over the past 60 days.

Merck has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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