Merck pauses Gardasil shipments to China amid sales forecast decline

In China, Merck's decision to pause shipments of the Gardasil vaccine comes as a surprise to many after the company adjusted its sales forecast for 2025, leading to a significant drop in its shares. The pause in shipments is expected to last at least until mid-2025. Merck CEO Robert Davis stated that this temporary halt is necessary to manage inventory levels and to support the financial position of its commercialization partner in the Chinese market. The decision reflects the ongoing market challenges Merck has faced in China, where demand for Gardasil has decreased substantially over the past few quarters. In the most recent financial report, Merck reported a 17% decline in Gardasil sales for the last quarter, totaling $1.55 billion. The challenging market dynamics in China are compounded by the sluggish economic growth forecasted by the International Monetary Fund, which is projected to drop from 4.8% last year to 4.6% in 2025 and further to 4.5% in 2026. The ongoing collapse in the Chinese housing market appears to have severely impacted consumer confidence, contributing to the downturn in demand for vaccines like Gardasil. Davis emphasized that although sales have declined, he believes that China still represents a significant long-term opportunity for Gardasil vaccinations, particularly given the potential market of unvaccinated girls and the newly approved vaccinations for boys. This approval marks a pivotal moment for Gardasil in the region. Despite the significant challenges, the company holds hope for future growth as they realign their supply strategies and address inventory issues. Furthermore, for 2025, Merck's adjusted earnings forecast suggests a range between $8.88 and $9.03 per share with anticipated sales of $64.1 billion to $65.6 billion. Analysts, however, had expected a more optimistic earnings estimate of $9.13 per share on sales of $67.07 billion. Merck's performance in the fourth quarter demonstrated a notable profit of $1.72 per share with revenues of $15.6 billion. This performance was driven partly by strong sales of Keytruda, a cancer treatment that saw a 19% increase to $7.84 billion, surpassing analyst expectations.