Merck Borrows Gardasil from CDC Stockpile Amid Global Supply Shortfall, Aims to Meet Full Demand by 2023

Compiled by Keke

Not until 2023 will MSD’s manufacturing facilities be able to fully meet global demand for the HPV vaccine Gardasil. How to address the supply shortfall? MSD has already begun borrowing vaccine doses from the U.S. Centers for Disease Control and Prevention (CDC)!

According to FiercePharma, MSD borrowed Gardasil 9 from the U.S. CDC’s pediatric vaccine stockpile this month to help meet demand for the vaccine in the United States. The vaccine is currently approved in the U.S. for adolescents and adults aged 9–45 years to prevent certain high-oncogenic-risk HPV types.

MSD stated during its third-quarter earnings conference call, “These borrowed vaccines will be used for routine immunization in the United States, while the company will be able to manufacture and supply vaccines to other regions around the world where demand exceeds supply, including areas with populations highly susceptible to infection.”

Even so, the ultimate outcome of “borrowing vaccines” is detrimental to the company’s interests, with a Merck & Co., Inc. spokesperson noting that this move would reduce the company’s fourth-quarter sales by approximately $120 million.

On Tuesday, October 29, MSD released its third-quarter financial results, reporting total global sales of $12.397 billion, a 16% year-over-year increase. Among these, Gardasil achieved sales of $1.32 billion, representing a 27% year-over-year growth. Gardasil has become the second best-selling product, trailing only Keytruda. As of September this year, the sales of the Gardasil portfolio have exceeded $3 billion.

Although Gardasil’s global sales grew by nearly 30%, its growth rate in the United States was only 3%. On one hand, factory supply could not keep up with demand; on the other, “living on borrowed money” is ultimately a loss-making proposition.

In 2017, a cyberattack paralyzed MSD’s production for several months. To address the severe market supply shortage, CDC stockpiles of Gardasil were utilized. A total of $240 million worth of Gardasil vaccines were borrowed that year. The production halt and borrowing strategy resulted in a 22% decrease in MSD’s HPV vaccine sales revenue for that quarter.

This summer, Merck & Co. announced the expansion of its vaccine production capacity in Virginia, USA, creating 100 new jobs. A few weeks later, the company announced it would close its varicella vaccine plant in North Carolina to build a new 225,000-square-foot facility for Gardasil, adding 425 jobs. Earlier this year, Merck also stated it would invest approximately $1.68 billion in two U.S. facilities to boost Gardasil production. However, these facilities are not expected to become operational until the coming years.

The market demand for Gardasil is clearly outpacing MSD’s production capacity. In China, since the approval of the 9-valent Gardasil vaccine in 2018 for women aged 16–26, it has consistently been subject to waitlisted appointments, with sales in the Chinese market becoming a significant driver of the vaccine’s global growth. Furthermore, if ongoing studies to expand the indicated age range (to include women aged 27–45) prove successful, the resulting expansion of the eligible population will further accelerate the demand and sales volume of Gardasil products.

“By 2023, supply is expected to increase to meet demand in the United States and globally,” Frank Clyburn, Chief Commercial Officer of Merck & Co., Inc. (MSD), told analysts. “As the company continues to align and redirect supply to meet global demand, the market for Gardasil will continue to grow in the coming years.”

At present, MSD has not yet determined whether it needs to further increase the volume of vaccines borrowed from the CDC to meet market demand. In an email on October 30, MSD spokesperson Pamela Eisele reiterated, “The company is making urgent investments in vaccine manufacturing to meet growing global demand. We will continue to monitor supply conditions to determine whether additional borrowing will be necessary in the future and when it will be appropriate to replenish inventory.”

Reference Sources:

[1] Merck siphons off Gardasil CDC supplies again as global sales surge

[2] Merck Announces Third-Quarter 2019 Financial Results