Caroline Litchfield
Chief Financial Officer at Merck & Co., Inc.
Thank you, Rob. Good morning. As Rob highlighted, we delivered another strong quarter. The fundamentals of our business remain healthy, fueled by robust global demand for our innovative portfolio. This strong performance reinforces the conviction we have in our science-led strategy and in our outlook for continued growth. We remain confident in our ability to consistently deliver strong results in the short-term, while we make disciplined investments in leading-edge science, which positions us to generate lasting value for patients, customers, and shareholders.
Now, turning to our third quarter results. Total company revenues were $16.7 billion, an increase of 4%, or 7% excluding the impact of foreign exchange. The following revenue comments will be on an ex-exchange basis. Our Human Health business sustained its momentum with sales increasing 8% primarily driven by Oncology. Our Animal Health business also delivered strong performance, with sales growth of 11%.
Turning to the performance of our key brands.
In Oncology, sales of KEYTRUDA grew 21% to $7.4 billion. Global growth was driven by increased uptake from earlier stage cancers and continued robust global demand from metastatic indications.
In the U.S., KEYTRUDA grew across a broad range of tumor types. In the earlier-stage setting, the largest driver was increased use in resectable non-small cell lung cancer. KEYTRUDA's market leadership continues to grow as part of a treatment regimen in the perioperative setting, building on its existing leadership position as adjuvant therapy. In metastatic disease, we saw increased uptake in first-line advanced urothelial cancer based on KEYNOTE-A39. KEYTRUDA plus Padcev continues its leadership in new patient starts, outpacing platinum chemotherapy-based regimens.
Outside the U.S., KEYTRUDA growth was driven by increased uptake in earlier stage cancers, including high risk, early stage triple negative breast cancer, as well as continued demand from patients with metastatic disease. Inflation related price increases consistent with market practice in Argentina also contributed to growth.
Lynparza alliance revenue grew 13% driven by increased global demand.
Lenvima alliance revenue declined 4% due to the timing of shipments last year.
WELIREG sales more than doubled to $139 million driven by increased uptake in certain patients with previously treated advanced renal cell carcinoma in the U.S.
In Vaccines, GARDASIL sales were $2.3 billion, a decrease of 10%, driven by a decline in China. In the U.S., sales benefitted from CDC purchasing patterns, as well as price and demand. Outside the U.S., sales increased by double digits in almost every region driven by robust demand.
In pneumococcal, VAXNEUVANCE sales increased 13% to $239 million, driven by ongoing launches in international markets. We are also excited by the recent launch of CAPVAXIVE, which is off to an encouraging start.
In Cardiovascular, the launch of WINREVAIR continues to gain momentum, with global sales of $149 million.
In the U.S., we have seen steady progress in adding new patients. During the quarter, approximately 1,700 new patients received a prescription, bringing the total number of new patient prescriptions to more than 3,700 since launch. Based on our experience to date, approximately 80% of those patients will receive commercial product. Given this, and the approximate one-month timeframe to complete the steps to commence therapy, more than 2,600 new commercial patients have started treatment since launch.
We are seeing physicians prescribe WINREVAIR to more of their patients and new physicians prescribe the product. Through the end of September, nearly 800 physicians have written at least one prescription, with most prescribers coming from either large academic centers or larger private practices. Physicians are continuing to prioritize the sickest patients, who have already been receiving multiple PAH therapies.
We are also making important progress in enabling access. We have achieved coverage for approximately 60% of lives, nearly doubling the amount from last quarter. Many payors have established coverage policies consistent with the label or STELLAR study criteria.
Outside the U.S., initial feedback from scientific leaders has been positive following the recent EU approval. We are pleased that the first patients in Germany have received a prescription for WINREVAIR. We look forward to securing reimbursement in other European countries, which typically takes 12 months, as well as launching in other international markets.
In summary, we are excited with the continued progress of the launch and look forward to positively impacting more patients with pulmonary arterial hypertension.
Our Animal Health business delivered strong growth, with sales increasing 11%. Companion animal sales grew 17%, driven by uptake from new product launches, including the long-acting BRAVECTO injectable in certain international markets, as well as price. Livestock sales grew 7%, reflecting higher demand for poultry and swine products, the inclusion of sales from the recently acquired aqua portfolio from Elanco, which closed in mid-July, and price.
I will now walk you through the remainder of our P&L, and my comments will be on a non-GAAP basis. Gross margin was 80.5%, an increase of 3.5 percentage points driven by reduced royalty rates for KEYTRUDA and GARDASIL as well as favorable product mix. Operating expenses increased to $8.5 billion, including $2.2 billion of charges related to the acquisition of EyeBio and a promising candidate from Curon. Excluding these charges, operating expenses grew 9%, reflecting strategic investments in support of our innovative early-and late-phase pipeline and key growth drivers.
Other income was $193 million, which includes a payment of $170 million from Daiichi Sankyo related to the collaboration for our T-cell engager. Our tax rate of 21.9% includes an unfavorable impact from the EyeBio and Curon transactions. Taken together, earnings per share were $1.57.
Now turning to our 2024 non-GAAP guidance. The continued operational strength of our business has enabled us to narrow our full year revenue guidance. We now expect revenue to be between $63.6 and $64.1 billion. This guidance range represents strong year over year growth of 6% to 7%, including an approximate 3 percentage point negative impact from foreign exchange using mid-October rates.
Our gross margin assumption remains approximately 81%. We expect operating expenses to be between $27.8 billion and $28.3 billion, which now includes the $750 million one-time charge related to the asset acquisition from Curon. As a reminder, our guidance does not assume additional significant potential business development transactions.
Other Expense is now expected to be approximately $100 million, including the benefit of the $170 million payment from Daiichi. Our full year tax rate is expected to be between 16.0% and 17.0%, which includes an unfavorable impact related to the Curon transaction. We assume approximately 2.54 billion shares outstanding. Taken together, we expect EPS of $7.72 to $7.77. This range includes a negative impact from foreign exchange of approximately $0.30, using mid-October rates.
Recall our prior guidance range was $7.94 to $8.04. Including the one-time charge of $750 million, or $0.29 per share, related to the asset acquisition from Curon and the $170 million, or $0.05 per share, benefit from the payment from Daiichi, our prior guidance range would have been $7.70 to $7.80, with a midpoint of $7.75. Therefore, our current guidance midpoint is unchanged.
Now turning to capital allocation, where our strategy remains the same. We will prioritize investments in our business to drive near-and long-term growth. We will continue to invest in our key growth drivers and expansive pipeline of novel candidates, each of which has significant potential to address important unmet medical needs. We remain committed to our dividend, with the goal of continuing to increase it over time. Adding compelling science through business development remains a priority and we are well positioned to pursue additional value-enhancing transactions. We will continue to execute a modest level of share repurchase.
To conclude, as we finish the year, we are confident in the momentum of our business, underpinned by robust global demand for our innovative medicines and vaccines. Our unwavering dedication to leverage compelling science to save and improve the lives of the patients we serve has put us in a position of financial and operational strength. Our commitment to bring forward important innovation will enable us to deliver value to patients, customers and shareholders well into the future.
With that, I'd now like to turn the call over to Dean.
