Will Declining Gardasil Sales Ail MRK's Top Line in Q3 Earnings?

Merck MRK is facing persistent challenges for its second-largest product, Gardasil, which is a vaccine for the prevention of certain cancers caused by human papillomavirus. Though the vaccine’s sales rose consistently till 2022, it started witnessing sluggish sales from 2024.

During the first half of 2025, Gardasil sales declined 48% on a year-over-year basis to $2.45 billion. Sales of Gardasil are declining due to weak performance in China, which resulted from sluggish demand trends amid an economic slowdown. Lower demand in China resulted in above-normal channel inventory levels at Merck’s commercialization partner in China, Zhifei.

Accordingly, Merck decided to temporarily halt shipments of Gardasil in China to allow Zhifei to burn down existing inventory. Merck does not expect to resume shipments to China through at least the end of 2025.

Gardasil sales are expected to decline significantly in 2025 from 2024 levels.

Merck is also seeing lower demand for Gardasil in Japan. Management expects Gardasil sales to remain weak in China as well as Japan in the third and fourth quarters of 2025. Our estimates for Gardasil sales suggest a negative CAGR of 15.1% over the next three years.

MRK's Other Vaccines & Competition in the Target Market

Besides Gardasil, Merck markets other vaccines like ProQuad/ M-M-R II/Varivax (measles, mumps, rubella and varicella virus vaccine, Vaxneuvance (pneumococcal 15-valent conjugate vaccine), RotaTeq (rotavirus vaccine), Pneumovax 23 (pneumococcal vaccine polyvalent) and its newest jab, Capvaxive (21-valent pneumococcal conjugate vaccine).

Sales of other vaccines like Proquad, M-M-R II, Varivax, Rotateq and Pneumovax 23 also declined during the first half of 2025.

Merck’s newest respiratory syncytial virus (RSV) antibody, Enflonsia (clesrovimab), was approved in the United States in June 2025, while it is under review in the EU. Merck is currently gearing up to launch Enflonsia to help protect infants entering their first RSV season.

Per management, Enflonsia is the first and only treatment option designed to protect infants with the same dose regardless of weight.

However, Enflonsia is likely to face stiff competition from AstraZeneca AZN/Sanofi’s SNY RSV antibody Beyfortus, which was approved for a similar indication in 2023.

AstraZeneca records a 50% share of gross profits on sales of Beyfortus in major markets outside the United States and 25% of brand revenues in the rest of the world markets received from partner Sanofi as Alliance revenues.

Beyfortus achieved blockbuster status in its first full year of sales in 2024.

Besides antibodies, some vaccines have been approved for preventing RSV in certain patients in the United States. These include Pfizer’s Abrysvo, GSK’s Arexvy and Moderna’s mRESVIA.

MRK's Price Performance, Valuation and Estimates

Year to date, shares of Merck have declined 15.8% against the industry’s rise of 5.6%. The stock has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.97 forward earnings, lower than 15.62 for the industry and its 5-year mean of 12.64.

The Zacks Consensus Estimate for 2025 earnings per share has decreased from $8.94 per share to $8.92, while the same for 2026 has decreased from $9.55 to $9.44 over the past 60 days.

MRK's Zacks Rank

Merck currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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