Merck's HPV Growth Continues

Merck's (NYSE: MRK  ) pharmaceuticals portfolio has a mix of strong growers and drugs that can barely tread water. I wrap up my series on Merck's leading products with a look at human papillomavirus vaccine, Gardasil, which had a 35% sales growth last year to more than $1.63 billion.

Gardasil continued to outperform a competitor from GlaxoSmithKline (NYSE: GSK  ) , but can Merck count on future growth?

Vaccine battle
Human papillomavirus, or HPV, is a common sexually-transmitted disease that may remain asymptomatic and work out of the body on its own. HPV can present with genital warts, but the vaccines focus more on the disease's potential cancer risks. HPV is responsible for 70% of cervical cancer cases, and may cause rarer cancers of the anus, vulva, or throat.

Gardasil was the first HPV vaccine to market, receiving its primary Food and Drug Administration approval in 2006. GlaxoSmithKline's Cervarix received approval in 2009.

Merck has a distinct advantage over Glaxo in this battle. Gardasil went on to receive approval for vaccinating men, which would help prevent the disease from spreading to women, and the Center for Disease Control demonstrated its support in 2011. The growth of male patients partly fueled last year's sales. Cervarix remains only approved for women.

Both vaccines protect against the two genotypes of HPV that risk cervical cancer. But Gardasil also protects against the genotypes that cause genital warts, which caused the U.K.'s National Health System to switch from Cervarix for Gardasil starting late last year.

The NHS win is significant, because the U.K. has a school immunization program that offers HPV vaccinations to 12- and 13-year-old girls. The vaccines aren't mandatory, but the convenience tends to provide stronger sales for the drug involved.

As Gardasil gains due to its broader indication, Cervarix sales fell 46% last year, to 270 million pounds (about $412 million at current exchange rates).

Cannibal rising?
Merck has new HPV vaccine V503 in phase 3 trials. V503 protects against the same genotypes as Gardasil, but expands to include five more. Data will show whether that added protection is even needed; early warning signs suggest that Gardasil offers sufficient protection.

V503 will need to show a necessary advantage to Gardasil before it would constitute a cannibalization risk.

Foolish final thoughts
I would place Gardasil in with the diabetes duo Januvia and Janumet as drugs that will continue performing for Merck in the next few years. Gardasil's future would look even brighter if the U.S. implemented a national immunization program similar to the one in the U.K.

Can Merck beat the patent cliff?
This titan of the pharmaceutical industry stumbled into 2013, and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, The Fool tackles all of the company's moving parts, its major market opportunities, and reasons to both buy and sell. To find out more -- and get a full year of free updates -- click here to claim your copy today.



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