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Merck ( MRK ) expects $3 bln annual savings by end of 2027

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Keytruda sales rise 9% to just under $8 billion

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Gardasil sales missed already weak Wall Street estimates

By Michael Erman

July 29 (Reuters) - Drugmaker Merck & Co on

Tuesday announced job and cost cuts it said will save $3 billion

a year as it posted lower second-quarter results due to

continuing weak demand for its Gardasil vaccine in China.

The company said the cost cuts include $1.7 billion in

annual savings from the elimination of certain administrative,

sales and R&D positions. It also plans to reduce its global real

estate footprint and optimize its manufacturing network.

Chief Executive Rob Davis said in a press release that the

moves "will redirect investment and resources from more mature

areas of our business to our burgeoning array of new growth

drivers."

The company expects to achieve the full $3 billion in annual

savings by the end of 2027.

Investors have been concerned about where Merck ( MRK ) will replace

revenue from its blockbuster cancer treatment Keytruda - the

world's best-selling drug, which is set to lose patent

protection toward the end of the decade. Gardasil's problems in

China have also been a drag on the company's results.

Merck ( MRK ) said it earned $5.4 billion, or $2.13 a share, in the

quarter, down from $5.8 billion, or $2.28 a share, a year

earlier.

Analysts, on average, had forecast earnings of $2.01 a

share. Merck's ( MRK ) quarterly R&D costs were lower than expected.

Revenue in the quarter was $15.8 billion, down from $16.1

billion a year earlier. Analysts, on average, were expecting

revenue of $15.9 billion.

Gardasil sales missed already weak Wall Street estimates.

The company said it sold $1.1 billion of the vaccine, which

prevents cancer caused by the human papillomavirus, down 55%

from a year ago. Analysts had been expecting $1.3 billion of

Gardasil sales in the quarter.

Merck ( MRK ) paused shipments of Gardasil to China in January. It

said the decline was primarily in China, but lower demand in

Japan had hurt sales as well.

Sales of Keytruda rose 9% to just under $8 billion in the

quarter, topping analyst forecasts of $7.9 billion.

The company, which announced a $10 billion takeover of

UK-based Verona Pharma earlier in July, narrowed its full-year

revenue forecast to a range of $64.3 billion to $65.3 billion.

It had previously forecast revenue of $64.1 billion to $65.6

billion for the year.

It now expects to earn $8.87 to $8.97 a share in 2025.

Analysts had forecast 2025 earnings to be $8.87.