Merck's HPV vaccine Gardasil rebounds from pandemic hit thanks to improved manufacturing capacity

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Merck has increased its capacity to produce HPV vaccine Gardasil, allowing the company to meet high demand overseas. (Merck)

Few blockbuster drugs felt the pandemic pinch as acutely as Merck’s HPV vaccine Gardasil.

With patients delaying doctors visits and prioritizing COVID-19 shots, pharma companies with established vaccines businesses took a hit last year and into this year.

When Merck released its second quarter earnings on Thursday, analysts figured the shot would rebound. The question was how much.

With sales of $1.23 billion in the period, Gardasil is back on track and ready to resume its upward trajectory. The vaccine franchise posted an 88% increase versus last year's second quarter, surprising analysts, who expected Gardasil to post sales of $1.04 billion, according to Zacks consensus.    

Gardasil's rebound wasn’t just about the pandemic subsiding in the U.S., Merck's human health president Frank Clyburn said on Thursday's conference call with analysts. The exec credited an “increased demand in China" and Merck’s improved ability to supply the shot, a development he said bodes well for the future.

“We expect Gardasil to significantly benefit from increases in productivity across our supply chain, which will allow us to fulfil the demand that we were previously unable to supply,” Clyburn said. “These improvements alone will drive very strong sequential and year-over-year growth for Gardasil.”

Gardasil’s leap helped Merck post revenues of $11.4 billion in the quarter, a 22% increase versus the same period of 2020, topping the analyst consensus of $11.1 billion. Merck now expects sales growth of 12% to 14% for the year to between $46.4 and $47.4 billion. The figures exclude contributions from Organon, the women’s health unit that Merck spun off earlier this year.

RELATED: Merck’s spending big to support Gardasil, and the HPV vaccine keeps pumping along

Aside from Gardasil, Merck's oncology superstar Keytruda also propelled growth. The key checkpoint inhibitor generated $4.18 billion during the quarter, a 23% increase.

While Merck's growth drivers impressed with their second-quarter performance, analysts still have concerns about the future as the company is heavily dependent on its top offerings. 

But with the spinoff of Organon, which brought a $9 billion dividend, Merck expects to be busy at the dealmaking table, particularly in oncology, new CEO Rob Davis said on Thursday.

“We need to become a broad player across oncology,” he said. “We have the strength, the leverage, the position of Keytruda and the data to really be a differentiated and unique observer of the space to be able to select the best opportunities.”  

RELATED: As Organon charts post-spinoff future, Merck's $9B cash infusion could fund big M&A score

While Merck may be looking to make deals, don't look for the drugmaker to ink any “large, synergy-driven" buys, Davis said. The CEO believes the company can "bring the greatest value" by adding its research "prowess" to drug candidates in earlier stages of development.