Hack forces Merck to borrow Gardasil doses from CDC stockpile, slamming Q3 sales

Working to recover from a damaging cyberattack, Merck reported that its star HPV vaccine missed sales expectations in the third quarter as it had to borrow from the CDC's stockpile to fulfill orders. 

On the drugmaker's third-quarter earnings call, Chief Financial Officer Robert Davis, J.D., said the company borrowed $240 million worth of Gardasil doses from the CDC's stockpile due to the "temporary production shutdown resulting from the cyberattack, as well as overall higher demand than originally planned." 

The company will realize that revenue as it replenishes the stockpile, he stressed, likely in the second half of next year. Gardasil generated $675 million in sales for the quarter versus consensus analyst estimates of $776 million. Sales for the franchise fell 22% compared to the same period last year.

RELATED: Merck targeted in global ransomware attack 

Still, Merck's president of global human health, Adam Schechter, told analysts demand for the vaccine "remains strong" and that sales would have grown around the world if not for the CDC borrowing. New patient starts are "helping to offset the negative impact in the transition to the two-dose regimen in the U.S.," Schechter said, which Merck previously warned could impact sales. Further, he said Merck believes it can maintain "continuous supply in the U.S. going forward."

All told, the company's vaccines generated $1.9 billion in sales in the third quarter, a slight dip from $2 billion in the same period last year. 

Merck reported the cyberattack back in June and later said the hack could lead to delays in its ability to fill orders. Members of Congress recently called on the drugmaker to detail the effects on its manufacturing. 

RELATED: Fresh off FDA approval, GlaxoSmithKline's Shingrix gets CDC panel vote over Merck shot 

Zostavax was a bright spot for Merck's vaccines in the quarter. With $234 million in sales for the period, the shingles vaccine beat analyst expectations of $195 million as it prepares to square off against new entrant Shingrix from GlaxoSmithKline.  

The GSK shot recently won FDA approval and is seen by many experts as superior to the older Merck option. Last week, a CDC panel recommended vaccination with GSK's Shingrix instead of Zostavax by an 8-7 vote.