Pharmaceutical giant Merck has exceeded expectations with its third-quarter revenue and adjusted earnings, driven by robust sales of its blockbuster cancer drug Keytruda, HPV vaccine Gardasil, and surprising growth in its Covid drug Lagevrio. Merck also raised its full-year sales forecast, indicating a positive outlook for the company.

According to the report, Merck's revenue for the third quarter reached $15.96 billion, marking a 7% increase compared to the same period last year. The company's net income soared to $4.75 billion, or $1.86 per share, up from $3.25 billion, or $1.28 per share, in the previous year. The adjusted earnings per share stood at $2.13, surpassing the estimated $1.95 expected by Wall Street analysts.

Keytruda, an antibody treatment used for various cancer types, contributed significantly to Merck's success. The drug raked in $6.34 billion in revenue, surpassing expectations of $6.20 billion. Merck credits this increase to higher utilization in the treatment of earlier-stage cancers, as well as strong global demand for metastatic indications.

Sales of Merck's HPV vaccine, Gardasil, also saw an impressive boost, generating $2.59 billion in revenue, up 13% from the same period in 2022. Although Gardasil sales decreased in the United States due to purchasing patterns by the Centers for Disease Control and Prevention, the underlying global demand, particularly in China, contributed to the strong performance.

In a surprising turn, Merck's Covid drug Lagevrio also played a significant role in the company's revenue growth. Despite the decline in demand for Covid products worldwide as the pandemic wanes, Lagevrio recorded $640 million in sales for the quarter, a 47% increase from the third quarter of 2022. The growth was attributed to higher demand in Japan, albeit offset by lower demand in Australia and the absence of sales in the U.K.

Fueled by these positive results, Merck has increased its full-year sales forecast to a range of $59.7 billion to $60.2 billion, higher than the previously guided range of $58.6 billion to $59.6 billion in August. However, the adjusted profit guidance was lowered to $1.33 to $1.38 per share, reflecting an upfront charge of $5.5 billion related to recent drug collaboration agreements, as well as one-time charges linked to acquisitions and collaboration deals.

Investors responded positively to the news, with Merck's stock closing nearly 2% higher on Thursday. However, the stock has experienced a 5% decline year-to-date. With a market value of approximately $268 billion, Merck continues to position itself as one of the largest pharmaceutical companies in the United States.

Merck's strong performance in the third quarter underscores its ability to deliver significant revenue growth through its diverse drug portfolio. While the company faces the challenge of reducing its dependence on Keytruda, efforts are underway to develop new formulations of the drug to protect its patent edge. As Merck looks ahead to the remainder of the fiscal year, the company appears poised for continued success in the pharmaceutical market.

Merck will be holding a conference call at 9 a.m. ET on Thursday to discuss the Q3 results and provide further insights into the company's strategies moving forward.