A steep fall in demand from China drove a 41% decline in MSD Q1 2025 sales of its human papillomavirus (HPV) vaccines Gardasil and Gardasil 9, marking a continued setback for the company’s second-highest selling product.
During MSD’s Q1 2025 earnings call on 24 April, chief financial officer Caroline Litchfield said MSD does not expect to resume Gardasil shipments to China before mid-year, following a suspension announced back in February.
Go deeper with GlobalData
Q1 2025 Gardasil sales totalled $1.3bn, down from $2.2bn in Q1 2024. Excluding the impact of foreign exchange, the decline was 40%. Despite the setback in China, the company said the revenue drop was partially offset by stronger demand in the US and Japan. Outside of China, Gardasil sales grew 14%, or 16% on a constant currency basis.
Vaccine sales hit by China headwinds
Litchfield acknowledged that China would continue to be a hang heavy on the company’s vaccine performance this year: “As we look to Gardasil globally this year, we expect China to be a headwind…expect, given the current dynamics in China, that it is not so likely that we will ship further product in China.”
The suspension in shipments came amidst a challenging environment in China, where a combination of regulatory scrutiny, growing local competition, and weaker discretionary spending hit foreign vaccine makers. MSD previously withdrew its $11bn Gardasil sales target in Q4 2024, citing the deteriorating outlook on the Chinese market.
Despite the pullback, Litchfield reiterated the company’s focus on long-term opportunities in China, including plans to expand access to the vaccine for males, and emphasised strong double-digit growth potential elsewhere.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataIn January 2025, MSD secured approval for Gardasil for men aged 9 to 26, and on April 14, 2025, the Chinese regulator approved the more advanced Gardasil 9 shot for men aged 16 to 26.
Tariffs and manufacturing shift
MSD CEO Robert Davis also addressed growing concerns about trade policy, as the US government moved forward with a Section 232 investigation into pharmaceutical imports – a precursor to potential industry-specific tariffs.
Davis said the company is anticipating approximately $200m in tariff-related costs from existing duties involving the US, China, Canada, and Mexico. He emphasised that MSD is actively adapting its manufacturing strategy to mitigate future risks.
Many large pharma companies like Johnson & Johnson Innovative Medicine (J&J) and Novartis have announced plans to increase manufacturing activity in the US against the backdrop of these tariff announcements, and MSD announced its own $1bn investment in the US in March 2025.
“Over the last few years, we’ve been evolving our supply chain strategy in an effort to better balance our manufacturing footprint, which aligns well with the new administration’s efforts to regrow the US manufacturing base,” Davis said on an investor call. “Since 2018 we’ve invested $12bn in US manufacturing, and we’ve committed to an additional $9bn plus for projects through 2028.”
Davis added that MSD is well positioned in the short term due to healthy inventory levels, but is preparing to further shift production regionally: “We’ve already started to identify where we can either reposition our own manufacturing, change the priorities of existing plants, bring on external manufacturing, in some cases,to bridge gaps, and then finally, to build internal manufacturing long term…we are aligned with what the administration is wanting to do.”
While declining to speculate on possible tariff rates, Davis reiterated that MSD is not planning to use pricing as a lever to offset tariffs, focusing instead on supply chain optimisation.
He also called for broader systemic reforms in the US pricing environment, including pharmacy benefit manager (PBM) reform: “Over 50 cents of every dollar goes to somewhere in the middle…If we could find a way to bring more of that back to the patient at the pharmacy counter, that could meaningfully reduce prices in the US.”
