Merck's Capvaxive Shines Amid Vaccine Industry Struggles

In a challenging landscape for vaccine sales, Merck's new adult pneumococcal shot Capvaxive has emerged as a bright spot, demonstrating strong growth in its third quarter performance. As the world's first pneumococcal vaccine designed specifically for adults, Capvaxive has shown promising results since its launch last year, contrasting with the overall decline in vaccine revenues across the pharmaceutical industry.

Capvaxive's Impressive Market Performance

Capvaxive generated sales of $244 million in the third quarter, a significant increase from $129 million in Q2. Since its introduction to the market following CDC recommendations in October of last year for individuals aged 50 and older, the vaccine has accumulated sales of $530 million over its first four quarters.

Merck's Chief Financial Officer, Caroline Litchfield, expressed confidence in the vaccine's performance during the company's quarterly conference call, stating, "Capvaxive is off to a very strong start."

Industry-wide Vaccine Sales Decline

While Capvaxive shows promise, the broader vaccine market faces challenges:

• Sanofi reported an 8% decline in overall vaccine sales, primarily due to lower vaccination rates and increased price competition for flu shots.
• GSK managed a modest 2% increase in global vaccine sales, despite a 15% decline in the U.S. market, largely attributed to reduced demand for its shingles vaccine, Shingrix.
• Merck's other vaccine offerings experienced declines, with HPV shot Gardasil down 24%, largely due to plummeting demand in China. Sales of ProQuad, MMR II, and Varivax collectively decreased by 3%, while Merck's other pneumococcal vaccine, Vaxneuvance, saw a 6% decline to $226 million.

Merck's Strategic Positioning and Future Outlook

Merck positions Capvaxive as an alternative to Pfizer's dominant Prevnar 20, citing CDC epidemiologic data that suggests Capvaxive's 21 serotypes cover 84% of pneumococcal disease in adults 50 and older, compared to 52% for Prevnar 20's 20 serotypes. However, Merck acknowledges that no direct efficacy comparisons between the two vaccines have been conducted.

As Merck prepares for the eventual loss of exclusivity for its cancer blockbuster Keytruda, the company is relying on new products like Capvaxive to drive growth. Other notable performers in Merck's portfolio include:

• Winrevair, a pulmonary arterial hypertension treatment, which achieved sales of $360 million, up 141% year-over-year.
• Welireg, a cancer drug that generated $196 million in sales, representing a 42% year-over-year increase and a 21% sequential growth.
• Ohtuvayre, a chronic obstructive pulmonary disorder drug recently acquired through Merck's $10 billion buyout of Verona Pharma.

Caroline Litchfield expressed optimism about Merck's future, stating, "As we go into 2026, we are expecting solid top-line growth for our company and that growth will be increasingly fueled by the number of new launches that we've had."

The success of these new launches is reflected in Keytruda's decreasing share of Merck's overall revenue, dropping from 51% in the second quarter to 47% in the third quarter. Merck reported total revenue of $17.3 billion for the quarter, surpassing analysts' consensus by $300 million, and slightly adjusted its annual revenue projection to a midpoint of $64.75 billion.