Merck & Co., Inc. (NYSE:MRK)’s fourth quarter sales of its Human Papilloma Virus (HPV) vaccine, Gardasil, registered a 9% year-on-year rise in 4Q. The annual increase was an impressive 14%. But it is not all good news for Merck & Co. as the company’s overall sales reduced by 1%.
The future of Gardasil
Gardasil’s sales in the 2016 fourth quarter alone reached $542 million and the annual sales of the drug reached $2.173 billion, a figure that accounts for more than 5% of the company’s total sales. But the future sales of Gardasil are bound to plummet, because of a Centers for Disease Control and Prevention (CDC) recommendation issued last year.
CDC recommended lower dose of HPV vaccines
In October last year, a CDC advisory committee’s research concluded that the HPV vaccine schedule should reduce from three shots to two shots for children under the age of 15. The schedule remains three shots for persons between the age of 15 and 26.
The recommendation, which CDC implemented, is not something Merck is ignoring. Through the EVP of Global Human Health, Adam Schechter, in a press conference call, Merck confirmed it was making plans for a “rapid transition.” Schechter said that the transition would see the sales of Gardasil fall in the US.
No competition
Aside from Gardasil, the other major HPV vaccine is GlaxoSmithKline Plc (NYSE:GSK) Cervarix. However, GSK pulled the drug from the USA market citing low demand. Currently, Gardasil is the only HPV vaccine in the US market.
Poor US HPV vaccination rates
According to CDC, HPV vaccination rates are at 21% for boys and 40% for girls. The Department of Health aims to improve the vaccination rates to 80% for both boys and girls by 2020.
HPV vaccine protects the body against contracting the Human Papilloma Virus, which is transmitted through sex and causes cervical cancer. The vaccine is recommended for preteens; research shows that the virus is most effective when administered to children aged 11 and 12.
The poor rates of vaccination can be attributed to the recommended age of vaccination putting into account that HPV is sexually transmitted. Doctors will prefer to avoid the awkward conversation of vaccinating a 12-year old for a sexually transmitted disease. The CDC is encouraging doctors to recommend the vaccine for the purpose of fighting cancer rather than preventing STDs.
Merck has initiated a campaign addressing Gardasil’s cancer prevention benefits. Merck stock closed Thursday’s session at $64.39, after increasing by 0.11%.
