Merck Lets Its Gardasil Down


Before Gardasil came to market two to three years ago, some analysts were saying it would become the biggest-selling vaccine in history.

But hope and reality have turned out to be two different things.

Gardasil is the relatively expensive set of three shots for the human papillomavirus (HPV), which is the leading cause of cervical cancer.

From the third quarter of last year to the fourth quarter Gardasil sales fell off a cliff. Merck posted $401 million in Gardasil revenue in Q3 2008. In Q4 '09, that number plummeted to $286 million. And MRK doesn't expect the downward trend to turn around anytime soon. This morning, in its earnings press releasethe drugmaker lowered its 2009 Gardasil sales forecast by $300 million.

Less than two months ago, Merck had predicted '09 Gardasil revenue in a range of $1.4 billion to $1.6 billion. Today, it dropped that range to $1.1 billion-$1.3 billion. And that's going to hurt overall revenue. On the conference call, Merck Chairman and CEO Dick Clark said that 2009 sales are now expected to "be in the lower half" of the $23.7 billion to $24.2 billion range. The consensus is $24.1 billion.

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Merck officials said part of the Gardasil problem is that so many 11-18 year-old females have already been innoculated that they're running out of new customers. And the 19-26 year-old population continues to be a marketing challenge. In addition, the FDA has delayed a decision on whether to open up the potential Gardasil market to women as old as 45. Merck also recently applied for permission to sell the shots to boys and young men who carry and transmit HPV. I also wonder what impact the recession is having on sales of the approximately $400 vaccine.

But Merck's head of global human health, Ken Frazier, insisted on the call, "The opportunity is still there."

GlaxoSmithKline is still waiting for the FDA to approve its competing vaccine Cervarix. If or when that happens that could put even more pressure on Gardasil.

Questions? Comments?