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Merck (NYSE:MRK) just took a major hit. The stock tumbled nearly 9.5% as of 2.52 PM today, after the company hit pause on shipments of its blockbuster HPV vaccine, Gardasil, to Chinaan unexpected move that rattled investors. The pause, expected to last through mid-year, signals deeper challenges in a market that was once a growth engine for Merck. Demand has slumped, and with lingering regulatory hurdles, Merck scrapped its ambitious $11 billion annual sales target for the vaccine. Add in concerns over Keytruda's looming patent expiration in 2028, and it's clear why Wall Street is on edge.
The company's 2025 forecast didn't help either. Revenue guidance of $64.1 billion to $65.5 billion landed well below analysts' $67 billion estimate. Gardasil's struggles in China drove a 17% drop in the vaccine's global Q4 sales, raising serious questions about how Merck plans to fill the gap. Keytruda was a rare bright spot, pulling in $7.8 billion for the quarterup 21%but with biosimilar competition on the horizon, Merck needs fresh growth drivers fast. One play: an easier-to-use version of Keytruda set to launch later this year. But will it be enough?
Merck still sees a long-term opportunity in China, betting on untapped demand for Gardasil, particularly among men. Meanwhile, it's doubling down on obesity drugs, striking a deal with Hansoh Pharmaceutical to take on Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY) in the weight-loss market. But with geopolitical risks, regulatory hurdles, and fierce competition in every direction, investors are left wondering: Can Merck navigate this storm and come out stronger?
This article first appeared on GuruFocus.