By Michael Ermann
(Reuters) – Merck & Co on Thursday forecast 2023 earnings lower than Wall Street estimates along with an expected sharp decline in sales of its COVID-19 antiviral treatment, and its shares fell about 2%.
The U.S. drugmaker reported better-than-expected fourth-quarter profit on strong sales of the COVID pill molnupiravir in Asia and its blockbuster cancer drug Keytruda.
But investors appear to be focused on the outlook for this year, and shares are down about 2% to $104.95, after dropping as low as $102.80 on Thursday.
Merck expects 2023 adjusted earnings to be between $6.80 and $6.95 per share, lower than the average analyst estimate of $7.36.
The forecast was influenced by a tax blow Merck will have to pay in connection with its $1.35 billion acquisition of cancer drug developer Imago BioSciences, the company said.
The company also expects molnupiravir sales to decline sharply in 2023, falling to about $1 billion from $5.68 billion in 2022. It forecasts 2023 sales of $57.2 to $58.7 billion, down from $58.7 billion. $59.3 billion last year.
“Merck faces a more challenging 2023” as 2022 sales growth from molnupiravir eases, Citi analyst Andrew Baum said.
Merck’s sales for the quarter were $13.83 billion, up from $13.52 billion a year earlier. Analysts were expecting revenue of $13.67 billion, according to data from Refinitiv.
Cancer immunotherapy Keytruda continues to grow, with fourth-quarter sales of $5.45 billion, up 19 percent from a year ago and roughly in line with analyst estimates.
Excluding items, Merck earned $1.62 a share, beating Wall Street expectations by 8 cents, according to Refinitiv.
Molnupiravir sales were $825 million for the quarter, well above double analyst estimates of about $358 million.
Merck Chief Executive Rob Davis said the pandemic wave that swept across Asia in the fourth quarter boosted sales of molnupiravir, sold under the brand name Lagevrio, particularly in Japan, South Korea and others areas of the Asia-Pacific region.
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“That’s really been the strength, and we’ve seen great demand for Lagevrio in those markets,” Davis said in an interview. “We are the market leader in Japan.”
The drug wasn’t approved for use in China until Dec. 30, so sales weren’t a factor in the fourth quarter.
Human papillomavirus (HPV) vaccine Gardasil reported revenue of $1.47 billion, slightly below analyst expectations.
(Reporting by Michael Erman in New Jersey, Leroy Leo and Khushi Mandowara in Bangalore; Editing by Bill Berkrot)