Gardasil grows, Zostavax struggles as Merck posts $6.5B in 2017 vaccine sales

Despite new challenges in shingles, Merck's vaccine business kept churning in 2017, generating sales of $6.5 billion and growing by 4.8% over the prior year. The increase came as GlaxoSmithKline launched Shingrix in the U.S., which industry watchers expect will put a serious dent in Merck's Zostavax sales. 

The Gardasil franchise led Merck's vaccine business for the year, generating $2.3 billion and growing by 6% over 2016. On a conference call accompanying the results, global human health President Adam Schechter said "increased global demand for gender-neutral vaccination" drove the increase.

But Gardasil 9 faces a near-term sales challenge from the CDC's decision to adopt a two-dose regimen; Schechter said a "rapid transition … will have a negative impact on sales in the U.S." The company believes 50% to 70% of boys and girls in the U.S. have received at least one dose, "so there’s room even there for continued growth," Schechter added.

Citing market changes in shingles, Shechter said competitive pressures to Merck's Zostavax—which pulled in $668 million last year—will be "very strong" going forward. In late October, the CDC's Advisory Committee on Immunization Practices issued a preferential recommendation for GSK's new Shingrix over Merck's Zostavax. It didn't take long for the market to react: Zostavax sales slipped 45% in the fourth quarter to $121 million. 

What's more, Merck expects additional challenges for Zostavax as GSK launches its product outside of the U.S., according to the executive.

But Merck recently terminated its European joint venture with Sanofi and is realizing some of those sales. Further, it can look to a Gardasil launch in China for new sales in a key market.

Sales for Merck's ProQuad, MMR II and Varivax reached $1.68 billion last year, up 2% over 2016. Pneumococcal polysaccharide vaccine Pneumovax 23 leapt 28% for the year to $821 million and RotaTeq grew 5% to $686 million.  

Merck reported 2017 results only days after Pfizer, another large vaccine player. That company tallied vaccine sales of $6 billion for the year, down 1% versus 2016. The vast majority of Pfizer's vaccine sales came from the world's bestselling vaccine, pneumococcal blocker Prevnar 13, which pulled in $5.6 billion for the year. Other top vaccine companies GlaxoSmithKline and Sanofi report their 2017 results on Wednesday. 

Looking down the line, Merck is working on a phase 3 pneumococcal conjugate vaccine that fights 15 serotypes, an "extremely interesting" cytomegalovirus vaccine and a program in dengue, executives said on the call. The drugmaker also has late-stage candidates against Ebola and shingles for immunocompromised individuals.