MSD's 2023 Financial Report: Keytruda Crowned Global Best-Selling Drug

As the 2023 earnings season for multinational pharmaceutical companies is about to end, MSD (NYSE: MRK) released its PD-1 inhibitor.Keytruda(Pembrolizumab) undoubtedly claimed the top spot on the global best-selling drug list. MSD's total revenue for 2023 was $60.1 billion, with Pembrolizumab alone contributing $25 billion, a year-over-year increase of 21% (at constant exchange rates, same below). The drug’s total sales in 2022 were $20.9 billion, and within just one year, it jumped from third place to first, surpassing AbbVie's Humira.Humira(Adalimumab, $14.4 billion) and Novo Nordisk's GLP-1 diabetes drugOzempic(Semaglutide, $13.9 billion). Previously, the COVID-19 vaccine Comirnaty, co-developed by Pfizer and BioNTech, ranked first with $55.9 billion in 2022 and $55.1 billion in 2021.

In 2023, MSD's pharmaceutical sales (excluding animal health products and other revenue) reached $53.6 billion, a year-on-year increase of 3%. The HPV vaccine Gardasil also performed strongly that year, with a year-on-year increase of 33%. Gardasil's sales reached $8.9 billion, just shy of making it into the list of the top ten best-selling drugs globally in 2023.

The combined sales of Pembrolizumab and Gardasil account for more than 63% of MSD's total revenue. Pembrolizumab was first approved by the U.S. FDA in 2014, with its core patent valid in the United States until 2028. Gardasil was first approved in 2006, and its patent has already expired, while Gardasil 9 was first approved for marketing in 2017, with its U.S. patent valid until 2028. However, in China, one of the most important vaccine markets globally, Gardasil already faces competition from domestically developed new HPV vaccines (including 9-valent products).

Sales Decline of Molnupiravir and Januvia (Sitagliptin) and Janumet (Sitagliptin and Metformin Combination) Partially Offset MSD's 2023 Pharmaceutical Sales Growth

In 2023, MSD invested approximately $30 billion in the development of new product pipelines to create products that could replace the status of Keytruda and Gardasil. In June 2023, MSD completed the acquisition of Prometheus Biosciences, a U.S.-based biotechnology company, for $10.8 billion, gaining access to its lead clinical candidate PRA023. This is a humanized monoclonal antibody (mAb) targeting Tumor Necrosis Factor (TNF)-like Ligand 1A (TL1A), which is in late-stage development for autoimmune diseases such as ulcerative colitis and Crohn's disease. In October, MSD entered into a collaboration with Daiichi Sankyo worth up to $22 billion, prepaying $4 billion to secure Japanese development rights for three Antibody-Drug Conjugates (ADCs). Previously, in 2022, MSD signed three significant agreements with Kelun Pharmaceuticals regarding ADC products, with a cumulative value exceeding $10 billion.

In the past three years, MSD has actively engaged in external collaborations, building a robust product pipeline covering three core therapeutic areas: oncology, cardiometabolic diseases, and immunology. The deals expected in 2023 are projected to add $15 billion in potential sales to this pipeline. The company launched over 20 Phase III trials in 2023, with more anticipated in 2024.

Finally, it is important to emphasize MSD's market performance in China. MSD's Q4 revenue in the Chinese market grew by 20% year-over-year, reaching $1.5 billion; its annual revenue increased by 32% year-over-year to $6.71 billion, accounting for over 12% of MSD’s global pharmaceutical sales. This signifies that MSD has solidified its leading position in China.

Gardasil Remains Key Growth Driver for MSD in China. During the earnings call, investors asked whether the approval of a new domestically produced HPV vaccine in China could pose a threat to MSD's future growth, especially given that a local company’s two-dose regimen was recently approved. MSD CEORob DavisHe expressed confidence in MSD's ability to maintain "the majority share of the private market":