Merck’s stock experienced a decline on Tuesday after the pharmaceutical company delivered an unexpected sales forecast for 2025 that fell short of Wall Street expectations. The company’s challenges stem in part from a suspension of shipments of its prominent Gardasil vaccine to China.
The company announced that it would temporarily halt shipments of Gardasil to China, a decision expected to last until at least mid-year. According to Chairman and CEO Robert Davis, this move aims to reduce inventory levels and assist the company’s commercialization partner in China, which currently holds the vaccine stock.
Davis acknowledged the tough market environment in China, which is characterized by a sluggish economy and low consumer demand. Gardasil sales in the region have been declining for several quarters, prompting the need for meaningful inventory reductions.
The International Monetary Fund’s recent forecast indicates that China’s economy, the second-largest globally, will slow down from a growth of 4.8% last year to 4.6% in 2025 and 4.5% in 2026. The downturn in the housing market has notably shaken consumer confidence in the country.
In the last quarter of the previous year, Gardasil’s overall sales dropped by 17%, totaling $1.55 billion, primarily attributed to the diminished demand in China. The Gardasil vaccine is designed to safeguard against the human papillomavirus (HPV), which can lead to cancer. This suspension of shipments comes shortly after Merck secured approval for the vaccine’s use in males in China.
Davis expressed optimism about the long-term potential for Gardasil in the Chinese market, noting the vast number of females and males—thanks to the recent approval—who remain unvaccinated.
In a separate discussion, Merck’s executives indicated that they do not expect significant repercussions from proposed tariffs on products produced in China, Mexico, or Canada, citing the company’s minimal manufacturing presence in those regions.
For the year 2025, Merck anticipates adjusted earnings to be between $8.88 and $9.03 per share, with projected sales between $64.1 billion and $65.6 billion.
FactSet data revealed that analysts had forecasted earnings of $9.13 per share and sales of $67.07 billion for the company based in Rahway, New Jersey.
For the recently concluded fourth quarter, Merck reported adjusted earnings of $1.72 per share on $15.6 billion in revenue, while sales of its leading cancer therapy, Keytruda, rose by 19% to $7.84 billion. Analysts had estimated earnings of $1.61 per share and revenue of $15.48 billion.
As a result of these developments, Merck & Co. Inc. saw its shares drop by 10%, equating to a decrease of $10.07, leading to a stock price of $89.72, even as broader market indexes experienced gains.
