Merck & Co. raised its full-year sales and profit forecast for the third time in a row on Tuesday, after the drugmaker’s market-leading cancer drug Keytruda handily beat an average of analysts’ estimates for the third quarter.

• Merck now expects 2019 sales of US$46.5 billion to US$47 billion, and adjusted earnings of US$5.12 to US$5.17 a share. Both are increases from July. 

Key Insights

• Keytruda posted sales of US$3.07 billion in the quarter, up 62 per cent from a year prior. Earlier this month, it was approved to treat some types of lung cancer in China, a major market, and the therapy gains sales every time global health authorities expand its use. The drug is on pace to sell more than US$10 billion this year.
• Gardasil, Merck’s vaccines for human papillomavirus, also saw a surge in sales. There, too, China was a factor -- the company said its 84 per cent sales growth in the country was driven in large part by the shot.
• The company didn’t make any news on one of the big questions about its future: Who will replace Chief Executive Officer Ken Frazier and research and development head Roger Perlmutter. The Kenilworth, New Jersey-based company told investors this summer that it is making preparations, but on Tuesday offered no new details.

Market Reaction

• Merck shares gained 2.2 per cent in trading before the market opened in New York. The shares are up 7.6 per cent year-to-date, the best gain among the major U.S. brand-name drug companies.
• Merck’s cancer immunotherapy drug Keytruda has been dominant, but its competitors are catching up. AstraZeneca Plc and Bristol-Myers Squibb Co. both recently reported positive clinical trial results lung cancer, the biggest market for the new drugs.
• The drugmaker’s net income was US$1.90 billion, down from US$1.95 billion a year prior.