By Manas Mishra and Michael Erman
(Reuters) -Merck & Co Inc said on Thursday it would take a bigger hit to sales this year than previously expected due to a resurgence in COVID-19 cases that has hurt demand for drugs that need to be given by doctors.
The pandemic is expected to shave 3% from overall sales, more than the previously projected 2%, after it resulted in a $600 million hit to Merck’s first-quarter sales.
Merck shares fell 3.1% to $74.73 after the company also missed first-quarter earnings estimates.
The surge in COVID-19 cases in the quarter took a particularly heavy toll on Merck’s sales as roughly two-thirds of its products are hospital administered, and a lack of routine health checkups likely led to lower detection of other diseases.
Merck said cancer screenings have been disrupted since the beginning of the pandemic, causing a lower number of patients to start treatment with drugs such as Keytruda, its blockbuster immunotherapy.
“With the rollout of the COVID vaccines, especially among the elderly where cancer incidence is highest, along with increased awareness campaigns, we believe screenings and diagnosis will soon return to normal levels,” said Frank Clyburn, president of Merck’s human health business.
The company also saw a decline in the use of its vaccines and missed routine vaccinations during the pandemic, hurt by government recommendations to avoid other shots in close proximity to getting the COVID-19 vaccines.
Sales of Gardasil, a vaccine to prevent cancers caused by the human papillomavirus, tumbled 16.4% to $917 million in the quarter, hurt by lower demand in the United States, Europe and China.
Sales of Pneumovax to prevent pneumococcal pneumonia and other infections caused by similar bacteria plunged 33%.
The company said it expects the impact to vaccine sales to persist during the first half of 2021.
Merck did not provide any update on when it would start production of Johnson & Johnson’s COVID-19 vaccine in a deal arranged by the U.S. government to help increase supplies of the one-dose shot.
Keytruda sales rose 18.7% to $3.90 billion, but missed analysts’ estimates of $3.98 billion. Sales of Bristol Myers Squibb Co’s rival drug Opdivo fell 3% in the quarter and also missed analyst estimates.
Merck has “the wrong portfolio for a pandemic,” said Citi analyst Andrew Baum, noting its dependence on vaccines and Keytruda.
Excluding items, the company earned $1.40 per share, missing the average analyst estimate by 23 cents, according to IBES data from Refinitiv.
(Reporting by Manas Mishra in Bengaluru and Michael Erman in Maplewood, N.J.; Editing by Sriraj Kalluvila and Bill Berkrot)
