Merck Reports Strong H1 2023 Performance with Keytruda Sales Reaching $12.07 Billion Amid Strategic Pipeline Expansion

On August 1, MSD announced its H1 performance for 2023, with total revenue of $29.522 billion in the first half of the year, a year-on-year decrease of 3%. Among this, Q2 revenue was $15.035 billion, a year-on-year increase of 3%. The decline in MSD's revenue in the first half of the year was mainly due to a significant reduction in the revenue of the COVID-19 drug Lagevrio (-87%) and the decline in sales of two diabetes drugs.

In the first half of the year, MSD's pharmaceutical business revenue was US$26.179 billion, a year-on-year decrease of 3%, including revenue in China of US$3.581 billion, a year-on-year increase of 13.7%; R&D expenditure was US$17.597 billion, a year-on-year increase of 227%.

Pembrolizumab (Keytruda, K drug) and HPV vaccines Gardasil/Gardasil 9 are the main sources of revenue for Merck Sharp & Dohme AG's pharmaceutical business, collectively contributing $16.495 billion, accounting for 63% of this portion of income. Due to the penetration of early cancer treatments and the significant clinical demand for metastatic cancer, Keytruda's sales in the first half of the year continued to reach a record high, reaching $12.065 billion, representing a year-on-year increase of 20%.

In the second half of the year, Keytruda (K药) will face regulatory decisions for neoadjuvant/adjuvant treatment of NSCLC (US/EU), first-line treatment of HER2-negative gastric cancer (US/EU/JPN), HER2-positive gastric cancer (EU), adjuvant treatment of NSCLC, as well as full approval for Merkel cell carcinoma and second-line treatment of hepatocellular carcinoma. Based on this, Keytruda’s annual sales are expected to reach new heights, ensuring its position as the "best-selling drug" without question.

Last August, Gardasil 9 was approved for an expanded age range in China, covering females aged 9-45, driving a strong growth in its sales. MSD anticipates that the sales of Gardasil/Gardasil 9 will surpass the 2022 figure (USD 6.897 billion) in 2023.

Apart from the two blockbuster products, Keytruda and Gardasil 9, other products have yet to achieve significant revenue. Sales of a series of products in the cardiovascular, neuroscience, immunology, and diabetes fields continue to decline. Clearly, MSD needs to find new sales growth points and competitive products to maintain high revenue, especially since the patent for Keytruda will expire in 2028, and other companies’ HPV nine-valent vaccines have already started Phase III studies in preparation to enter the market competition.

In the past two years, MSD has made significant moves in the ADC track and autoimmune disease field, heavily investing in a series of ADC projects by Kelun-Biotech and acquiring the promising company Prometheus Biosciences. Rob Davis, CEO of MSD, also mentioned during the Q2 earnings call that if there are potential blockbuster products aligning with the company’s strategic direction, MSD would consider further acquisitions. Additionally, the personalized vaccine mRNA-4157 and the oral PCSK9 inhibitor enlicitide are potential products expected to contribute to future sales growth, both of which have now entered Phase III clinical trials.

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