Oct 31 (Reuters) - Merck & Co ( MRK ) posted

higher-than-expected third-quarter earnings on Thursday on

strong sales of its blockbuster cancer treatment Keytruda, but

the U.S. drugmaker also flagged a second straight quarter of

weak demand for its Gardasil vaccine in China.

Gardasil, which prevents cancers caused by the human

papillomavirus, has been one of Merck's ( MRK ) top growth drivers aside

from Keytruda and much of its international growth has come from

China.

Gardasil sales fell 11% to $2.31 billion, missing analysts'

estimates of $2.46 billion.

"It is both a demand issue driven by the economy, some

impact on promotional activity we think related to concerns

about anti-corruption, as well as continuing adjustment of

inventory levels in the marketplace," Chief Executive Rob Davis

said of the vaccine's China sales in an interview.

"Ultimately, what we have to do is drive demand."

The company posted third-quarter earnings of $3.99 billion,

or $1.57 a share, down from $5.43 billion, or $2.13 a share, a

year ago due to costs from acquisitions. Analysts on average

expected earnings of around $1.50 a share, according to LSEG

data.

Overall sales in the quarter rose 4% to $16.66 billion,

topping analyst forecasts of $16.45 billion.

Keytruda sales rose 17% to $7.43 billion in the quarter,

beating Wall Street expectations of $7.20 billion.

The company had similar issues with Gardasil in China in the

second quarter. Beijing has been running a campaign targeting

bribery of doctors that disrupts business and scuttles hospital

deals with international pharmaceutical companies.

Gardasil sales have more than doubled since 2020 and are

expected to top $9 billion this year.

"Outside of China, we're seeing strong growth," Davis said,

adding that the company has seen "double-digit growth in almost

every other major region."

Davis said Merck ( MRK ) still believes the long-term opportunity

for Gardasil in China is significant with a meaningful

population of women who could receive the vaccine as well as a

potential expansion to men.

The company still expects to hit its goal of $11 billion in

global sales for the vaccine by 2030.

Gardasil is not the only vaccine that has been hurt by

weakness in China. GSK said on Wednesday that sales of

its shingles vaccine Shingrix fell in the largest Asian economy.

Merck ( MRK ) shares closed at $104.83 on Wednesday. They are down

around 7% this year, underperforming the S&P 500, which is up

over 22% over the same period.