Merck's Gardasil Strategy: Navigating Market Challenges & Regulatory Dynamics Q1 2025

Merck & Co., Inc. — Gardasil Vaccine: Challenges and Opportunities

Market Dynamics and Sales Performance

• China Market:

  • Gardasil sales in China declined by approximately $1.1 billion, representing a 40% decrease.
  • This decline is attributed to elevated channel inventories and continued soft demand.
  • Merck expects China to be a headwind for Gardasil sales in 2025.
  • The company plans to assess mid-year whether to ship further products in China, with current dynamics suggesting it is unlikely.
  • The decline in China has led Merck to withdraw its previous $11 billion global Gardasil sales target, as China was a significant contributor to that goal.

• Japan Market:

  • Japan experienced a successful catch-up cohort vaccination program that ended on March 31, 2025.
  • Following the program's conclusion, Gardasil sales in Japan are expected to moderate, reflecting primarily the primary age cohort.
  • This moderation contributes to a slowdown in growth in Japan from Q2 2025 onwards.

• Global and U.S. Markets (Excluding China):

  • Outside China, Gardasil sales grew by 16% globally.
  • The U.S. market showed benefits from both price and demand.
  • Merck expects strong double-digit growth for Gardasil globally excluding China throughout 2025.
  • The company is focused on protecting access and innovation in the U.S. market.

Dosing Recommendations and Regulatory Considerations

• Potential Single-Dose Regimen:

  • Merck is aware of discussions by the Advisory Committee on Immunization Practices (ACIP) regarding reduced dosing or single-dose recommendations.
  • The FDA has set a high evidentiary standard for approving reduced dosing, requiring:
    • Efficacy against disease endpoints (not just infection).
    • Data in both males and females.
    • Long-term durability of protection.
  • Current trials do not meet these FDA criteria, creating a disparity between FDA requirements and ACIP proposals.
  • Merck emphasizes confidence in the safety and efficacy of the current Gardasil nine dosing regimen.
  • The company plans to ensure cost-effectiveness is understood if dosing recommendations change and will price the vaccine appropriately.

• Age Recommendation Update:

  • ACIP is considering extending the HPV vaccination recommendation to include children aged 9 years and older (currently 11 to 12 years).
  • Merck views this as a positive development that may improve vaccination completion rates.
  • This broader recommendation is expected to reinforce existing vaccination practices rather than create a significant sales upside in the U.S.

Strategic and Operational Responses

• Business Focus:

  • Merck is actively working to maximize Gardasil opportunities outside China, including efforts to launch in males in China.
  • The company is advocating with U.S. policymakers to protect access and maintain leadership in HPV vaccination.
  • Merck is balancing investments in innovation and execution to sustain long-term growth.

• Manufacturing and Supply Chain:

  • Merck is evolving its supply chain strategy to better balance manufacturing footprints, including significant investments in U.S. manufacturing.
  • This strategy supports medium- and long-term supply security amid global market dynamics.

Summary:

Merck is addressing Gardasil-related challenges by managing the slowdown in China due to inventory and demand issues, moderating sales in Japan post-catch-up program, and focusing on strong growth in other global markets. The company is closely monitoring regulatory discussions on dosing, emphasizing the high standards set by the FDA and maintaining confidence in the current dosing regimen's efficacy and safety. Merck is also strategically investing in manufacturing and advocating for policies that protect vaccine access and innovation, particularly in the U.S.