Merck Temporarily Halts Gardasil Shipments to China
The company cites a decline in sales and excess inventory as the main contributing factors.
Merck’s recent earnings call revealed that although the company generated worldwide sales of $64.2 billion—an 7% increase over 2023—the company will be temporarily suspending Gardasil shipments to China until at least June, citing a decline in sales and excess inventory that needs to be cleared as the main reasons behind the decision.1
Gardasil—a vaccine that combats human papillomavirus (HPV)—made $8.6 billion in global sales last year, but this represented a 3% decline over 2023 numbers.
"Like many other companies, we've seen increased pressure on discretionary consumer spending, including across the vaccine space more broadly, and demand for Gardasil has not recovered to the level we had expected," Merck CEO Rob Davis said during the company's conference call, as reported by Reuters.2
Concerns date back to Q2 2024, when Caroline Litchfield, Merck’s executive vice president and CFO, pointed out a decrease in shipments from China.3
“For Gardasil, over the past few years, we've benefited from extremely strong demand in China including from the expanded indication of Gardasil 9 to the 9- to 45-year age cohort in late 2022,” she explained. “In the second quarter, however, there was a significant step down in shipments from our distributor and commercialization partner, Zhifei, into the points of vaccination compared with prior quarters, resulting in above-normal inventory levels at Zhifei.”
Merck executives also noted that they would pulling the plug on its goal of reaching $11 billion in sales by the year 2030.4
This takes place amid the heightened tensions between the United States and China in which the US has imposed a 10% tax on goods; in response, China has imposed tariffs of their own that will become active Feb. 10, including a 15% tax on coal and liquefied natural gas, along with a 10% tax on crude oil, agricultural machinery, large-displacement cars, and pickup trucks.5
References
1. Merck Announces Fourth-Quarter and Full-Year 2024 Financial Results. Merck. February 4, 2025. Accessed February 5, 2025. https://www.merck.com/news/merck-announces-fourth-quarter-and-full-year-2024-financial-results/
2. Erman M, Sunny ME. Merck stops Gardasil shipments to China, hitting 2025 outlook; shares tumble. Reuters. February 4, 2025. Accessed February 5, 2025. https://www.reuters.com/business/healthcare-pharmaceuticals/merck-pauses-gardasil-shipments-china-hitting-its-2025-outlook-2025-02-04/
3. Motley Fool Transcribing. Merck (MRK) Q2 2024 Earnings Call Transcript. The Motley Fool. July 30, 2024. Accessed February 5, 2025. https://www.fool.com/earnings/call-transcripts/2024/07/30/merck-mrk-q2-2024-earnings-call-transcript/
4. Armstrong A. Merck’s Gardasil Woes Grow as China Trade War Heats Up. BioSpace. February 4, 2025. Accessed February 5, 2025. https://www.biospace.com/business/mercks-gardasil-woes-grow-as-china-trade-war-heats-up
5. Saraceno N. Trump Pauses Canada and Mexico Tariffs. Pharmaceutical Commerce. February 4, 2025. Accessed February 4, 2025. https://www.pharmaceuticalcommerce.com/view/trump-pauses-canada-mexico-tariffs
