Merck Reports Stellar Q1 China Sales Surge of 67% to $725 Million Driven by Key Innovative Products

Source:GBIHealth(ID: GBIHealth), Author: GBIHealth

GBI News: Following multinational pharmaceutical companies such as Roche, Sanofi, and AstraZeneca, US pharmaceutical giant Merck & Co., Inc. (MSD) recently released its financial report for the first quarter (Q1) of 2019. The report showed that MSD’s global revenue in Q1 reached $10.8 billion, representing an 11% year-on-year increase at constant exchange rates. This strong Q1 performance led MSD to raise its full-year 2019 sales forecast from the previous range of $43.2–44.7 billion to $43.9–45.1 billion.

The Chinese market achieved a rapid growth of 67%.

According to the financial report, MSD’s performance in the Chinese market in Q1 was quite impressive: sales reached $725 million, a year-on-year increase of 67% at constant exchange rates. The high growth rate of 67% also means that MSD surpassed Roche (64%) to become the best-performing multinational pharmaceutical company in China in the first quarter of 2019.

MSD executives stated during the earnings conference call that the outstanding performance in the Chinese market was primarily driven by new products. According to the financial report, the PD-1 inhibitor Keytruda (pembrolizumab injection), approved and launched in China in 2018, along with the 9-valent HPV vaccine Gardasil 9, and the 4-valent HPV vaccine Gardasil, which was launched in 2017, were the main drivers of performance in the first quarter. Meanwhile, sugammadex injection, a muscle relaxant approved and launched in 2017, also performed well.

MSD CEO Ken Frazier emphasized, “We have only scratched the surface in seizing opportunities in major markets such as China.” Innovative drugs are accounting for an increasingly significant share of MSD’s sales in the Chinese market, and this strategic shift is expected to help the company withstand the impact of the “4+7” policy on originator drugs facing patent expiration.Volume-Based Procurement Impact of the Policy. According to Roger Perlmutter, Head of Merck Research Laboratories, “approximately 60%–70% of the company’s product pipeline consists of innovative products.”

Advancing the Inclusion of Pembrolizumab in the National Reimbursement Drug List

Although Merck Sharp & Dohme (MSD) did not disclose specific sales figures for its products in China, company executives and investors alike focused their attention on pembrolizumab, a PD-1 inhibitor that was newly launched in the Chinese market in 2018, during the earnings conference call. Pembrolizumab was first approved in China in July 2018 as a second-line therapy for patients with metastatic melanoma. Subsequently, in March 2019, it received approval for a second indication in China—namely, as a first-line treatment in combination with pemetrexed and chemotherapy for non-small cell lung cancer (NSCLC)—thereby becoming the first PD-1 inhibitor to secure approvals for two indications in the Chinese market.

According to Frank Clyburn, Chief Commercial Officer of MSD, the company is currently in discussions with relevant Chinese authorities regarding the inclusion of pembrolizumab in this year’s National Reimbursement Drug List (NRDL). However, the large number of lung cancer patients in China may pose a significant challenge. “Given the timing of the approval for the lung cancer indication, we need to assess whether inclusion in the NRDL is feasible this year,” said Clyburn. He pointed out that among the 600,000–700,000 lung cancer patients in China, approximately 200,000 are eligible for treatment with this combination therapy. To date, pembrolizumab has received approval for 18 indications across 11 tumor types globally. MSD executives expressed confidence in their ability to compete with domestically produced PD-1 inhibitors. “Even without NRDL inclusion, we remain confident in the positioning of pembrolizumab in the Chinese market,” Clyburn stated. “It is evident that competition in the Chinese market will be intense, but we believe that pembrolizumab’s first-mover advantage as an approved first-line treatment for lung cancer will place the company in a favorable position.”

MSD predicts that its performance in China will maintain strong momentum over the long term and will not rely solely on pembrolizumab. According to GBI SOURCE data, MSD had seven products approved in China between 2017 and 2018. Currently, demand among Chinese patients for MSD’s cervical cancer vaccines, Gardasil-4 and Gardasil-9, remains robust. Additionally, the PARP inhibitor Lynparza (olaparib tablets), co-developed by MSD and AstraZeneca, and the hepatocellular carcinoma drug Lenvima (lenvatinib), co-developed by MSD and Eisai, were both approved for marketing in China in 2018. Lynparza was the first PARP inhibitor approved in the Chinese market, while Lenvima was the first new systemic therapy approved in nearly a decade as a first-line treatment for unresectable hepatocellular carcinoma in China. Under previous agreements with AstraZeneca and Eisai, MSD also generates revenue from these two products.

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