Merck & Co., Inc. (NYSE:MRK), the global pharmaceutical and healthcare company, has reported strong financial results for the first quarter of 2024, showcasing the resilience and growth potential of its diversified portfolio. The company's focus on innovation and strategic execution has positioned it for continued success, even as it navigates the evolving healthcare landscape.
Financials
For the full year 2023, Merck reported annual net income of $9.14 billion, annual revenue of $59.87 billion, annual operating cash flow of $13.01 billion, and annual free cash flow of $9.14 billion. These figures demonstrate the company's ability to consistently deliver value to its shareholders.
In the first quarter of 2024, Merck reported total revenues of $15.78 billion, a 9% increase compared to the same period in the prior year. This growth was driven by strong performance across the company's key business segments, particularly in the Pharmaceutical division.
Pharmaceutical Segment Performance
The Pharmaceutical segment, which accounts for the majority of Merck's revenue, generated $14.01 billion in the first quarter, a 13% increase on an ex-exchange basis. This was primarily attributable to the continued success of the company's flagship oncology product, KEYTRUDA (pembrolizumab), as well as robust growth in its vaccines portfolio.
KEYTRUDA, Merck's anti-PD-1 therapy, reported sales of $6.95 billion in the first quarter, a 24% increase on an ex-exchange basis. The growth was driven by increased uptake in earlier-stage cancer indications, such as non-small cell lung cancer, as well as continued strong demand in metastatic settings. The company's alliance revenue from Lynparza and Lenvima, both of which are developed in collaboration with partners, also contributed to the oncology segment's performance, growing 7% and 10%, respectively.
Merck's vaccines portfolio also delivered impressive results, with combined sales of GARDASIL and GARDASIL 9, the company's human papillomavirus (HPV) vaccines, increasing 17% to $2.25 billion. This growth was driven by strong global demand, particularly in China, as well as favorable timing of shipments and purchasing patterns in the U.S. The company's newer vaccine, VAXNEUVANCE, also continued to gain traction, with sales more than doubling to $219 million.
Animal Health Segment Performance
In the Animal Health segment, Merck reported sales of $1.51 billion, a 4% increase on an ex-exchange basis. This was driven by growth in both the Livestock and Companion Animal business units, with the former benefiting from price actions and increased demand for swine and poultry products, and the latter seeing the positive impact of price increases.
Outlook
Merck's strong performance in the first quarter has enabled the company to raise and narrow its full-year 2024 revenue guidance. The company now expects revenue to be between $63.1 billion and $64.3 billion, reflecting year-over-year growth of 5% to 7%, including the negative impact from foreign exchange. This revised guidance takes into account the operational strength of the business, partially offset by an incremental headwind from foreign exchange.
The company's gross margin is expected to be approximately 81%, while operating expenses are anticipated to be in the range of $25.2 billion to $26.1 billion. Merck's full-year non-GAAP earnings per share guidance has also been increased and narrowed to $8.53 to $8.65, despite an incremental headwind from foreign exchange of more than $0.30.
Recent Developments
Merck's focus on innovation and pipeline development continues to be a key driver of its performance. The company recently received FDA approval for WINREVAIR (sotatercept), a first-in-class treatment for pulmonary arterial hypertension (PAH), marking a significant milestone. The launch of WINREVAIR is off to a strong start, with the company seeing increasing prescriptions and good payer coverage.
In addition to the successful WINREVAIR launch, Merck's pipeline remains robust, with several late-stage candidates in development across various therapeutic areas, including oncology, vaccines, and infectious diseases. The company is particularly focused on the potential of its investigational 21-valent pneumococcal conjugate vaccine, V116, which is currently under priority review by the FDA and the European Medicines Agency.
Merck's commitment to strategic business development also remains a priority, as evidenced by the recent acquisition of Harpoon Therapeutics, a clinical-stage immunotherapy company. This transaction strengthens Merck's oncology pipeline and reinforces the company's position in the field of immuno-oncology.
Conclusion
Despite the challenges posed by the evolving healthcare landscape, Merck has demonstrated its ability to navigate these complexities and deliver consistent financial performance. The company's diversified portfolio, robust pipeline, and strategic execution have positioned it well to continue creating value for its shareholders.
Looking ahead, Merck remains focused on leveraging its scientific expertise, commercial capabilities, and operational excellence to drive sustainable growth and deliver innovative solutions that improve the lives of patients around the world. Investors can expect the company to continue its pursuit of scientific breakthroughs and strategic initiatives that will solidify its position as a leading global healthcare provider.