The maker of cancer blockbuster Keytruda said it believes patients and health care systems have now “largely adapted to the impacts of COVID-19” and the pandemic should reduce its 2021 revenue by less than 3%. The drug giant slimmed down with a June 2 spinoff that combined its Organon women’s health unit with its businesses selling biosimilars, or near-copies of pricey biologic drugs, and off-patent former blockbusters like respiratory drugs Singulair and Nasonex.
The profit fell just short of expectations and Shares of Merck fell slightly Thursday. The company narrowly missed Wall Street’s profit expectations, and Merck shares fell slightly in early trading Thursday. Adjusted earnings came to $1.31 per share, two cents below the $1.33 analysts expected. Merck took a $1.7 billion charge for the April 1 acquisition of Pandion Therapeutics, a biotech company developing new treatments for autoimmune diseases.
The Kenilworth, New Jersey, company posted revenue of $11.4 billion, up 22% from $9.4 billion in 2020′s second quarter. The earnings and revenue figures are adjusted to exclude the businesses spun off last month. Total prescription drug sales climbed 22% to $9.98 billion, while sales of drugs and vaccines for pets and livestock jumped 34% to $1.47 billion.
Edward Jones analyst Ashtyn Jones wrote to investors that the results reflect “a solid recovery from second-quarter results last year at the height of the pandemic,” with cancer screenings and other doctor visits picking up and sales of most key drugs increasing. Shares fell $1.44 or 1.8%, to $76.89. The Organon spinoff brought Merck a $9 billion windfall, which the company’s new executive team said will help fund share buybacks and business development.
However, new Chief Executive Rob Davis, who took over upon the June retirement of longtime CEO Ken Frazier, told analysts on a call to discuss the quarterly results that he doesn’t plan any megadeals primarily meant to cut costs. “I think we have enough firepower in our portfolio” of drugs, he said, to balance the company’s business by winning approvals of experimental drugs and new uses for existing ones whiles making smaller, targeted acquisitions. Davis said the company needs to broaden its small cancer drug portfolio, along with adding other new medicines. Merck has long faced investor criticism that it’s far too dependent on Keytruda, which is now approved for treating a dozen types of cancer in multiple patient groups. Keytruda brought in $4.2 billion in the second quarter, more than one-third of total revenue.
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