USA —Merck and Bristol Myers Squibb (BMS) have recently released their first-quarter earnings reports, with both facing their own set of challenges.

Merck & Co Inc demonstrated impressive results, exceeding Wall Street’s expectations primarily due to the strong performance of their cancer immunotherapy drug, Keytruda, and human papillomavirus (HPV) vaccine, Gardasil.

Keytruda alone generated sales of nearly US$5.8 billion, reflecting a 20% increase from the previous year.

Moreover, Gardasil’s sales increased by 43%, amounting to almost US$2 billion, driven by strong demand outside the US, especially in China.

Despite Merck’s impressive sales figures, their revenue declined year-over-year, mainly due to a sharp but anticipated drop in sales from their COVID pill, molnupiravir, owing to the decreasing number of COVID cases reported to the Centers for Disease Control and Prevention since January.

However, excluding this drug, the company’s revenue increased by more than 10%, which is a positive sign for Merck.

Merck’s diabetes drug, Januvia, experienced a 29% slump, with sales of US$880 million, which missed expectations.

The company attributed this decline to stiff competition in the European diabetes market. Nevertheless, Merck raised its outlook for the year, projecting sales of US$57.7 billion to US$58.9 billion, in line with analyst forecasts.

The company also increased its adjusted profit prediction to US$6.88-US$7 per share, with the midpoint exceeding analysts’ estimates of US$6.91.

Earlier this month, Merck announced its plan to purchase Prometheus Biosciences Inc for about US$10.8 billion, a move aimed at diversifying its late-stage pipeline.

Prometheus Biosciences is developing an antibody for the treatment of ulcerative colitis and Crohn’s disease, offering Merck a promising experimental treatment option.

Although the company’s 2023 outlook does not reflect any impact from the acquisition, the purchase is expected to close in the third quarter of this year.

Merck’s acquisition of Prometheus Biosciences aligns with its strategy to diversify its product portfolio, particularly as Keytruda’s key patents are expected to expire in 2028.

In terms of specifics, Merck’s first-quarter sales decreased from US$15.9 billion last year to US$14.5 billion this year.

Despite this decline, analysts expected even lower sales of US$13.8 billion, according to Refinitiv data.

Meanwhile, BMS’s sales dropped by 3% to US$11.34 billion, below the expected US$11.5 billion.

However, their adjusted earnings rose 5% to US$2.05 per share, exceeding analysts’ forecast of US$1.97 per share.

BMS’s bestselling drug was Eliquis, a blood thinner that generated US$3.42 billion, reflecting a 7% increase from the previous year.

Nonetheless, according to a note by an analyst, BMS is struggling to overcome declining sales for its generic medicines, such as Revlimid and Abraxane.

Sales of Revlimid plummeted by 37% to US$1.75 billion, while Abraxane revenue climbed 12% to US$239 million.

Although sales of Eliquis and Opdivo were in line with expectations, many other product lines fell short of expectations.

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